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Subscription Box Services Yield Mixed Results

19 Dec

Earlier this year, we asked: What’s Ahead for the Subscription Box Service? Now, we have more information to answer that question. According to recent research, subscription box services yield mixed results.

So, what exactly are subscription boxes? According to Jameson Morris, an expert in this the field: “A subscription box is a recurring, physical delivery of niche-oriented products packaged as an experience and designed to offer additional value on top of the actual retail products contained in a box.”


Subscription Box Services Yield Mixed Results

Yes, some subscription box services are doing much better than others. And the industry itself is in a state of flux.

One leader is Stitch Fix, “the personal style service that evolves with your tastes, needs, and lifestyle.” How does it work?

First,”Share your style, size, and price preferences with your personal stylist.” Second, “Request A Fix® Delivery. And get 5 hand-selected pieces of clothing delivered to your door. With no subscription required.” Third, “Buy what you like, send back the rest. Shipping is free and easy both ways. When you sign up for automatic deliveries, we’ll send you regular orders without extra effort from you. You choose how often that’s right for you: every 2-3 weeks, every month, every other month, or every three months.”

As eMarketer reports: “In fact, while some subscription box companies struggle to stay afloat, Stitch Fix’s number of active clients jumped nearly 10 times to 2.2 million as of July 29. Furthermore, a study from Hitwise found that online traffic in the subscription box space declined by 3% in September compared with a year prior. But Stitch Fix’s traffic didn’t: It more than doubled during that same period.”

The chart shows the subscription box leaders.

Subscription box services yield mixed results. Let's see who are doing best -- and who are struggling.


J.C. Penney Enters Subscription Box Marketplace

As with many other department store chains, J.C. Penney wants to embark on new activities. Why? To help turn around sales revenues. As a result, it is testing a subscription service. Will it succeed? Time will tell.

eMarketer reports that:

J.C. Penney has teamed with Bombfell, a men’s subscription service, to offer curated boxes to its Big & Tall customers. The service will work as many other subscription box services do. A stylist will curate several pieces based on customer preferences. But this partnership will offer Big & Tall sizes — something Penney specializes in — s well as pricing intended to undercut typical subscription box services.”

“Said eMarketer analyst Yory Wurmser, ‘As shopping moves online or to discount chains, mid-tier department stores need to find ways to differentiate their brand and create stickiness. A subscription service is one way. But I don’t see it as a game-changer. Instead, as a sign that the chain is thinking creatively about consumer behavior.'”


What’s Ahead for the Subscription Box Service?

13 Mar

Are subscription boxes a fad or sustainable business model? According to Jameson Morris, a specialist in the field: “A subscription box is a recurring, physical delivery of niche-oriented products packaged as an experience and designed to offer additional value on top of the actual retail products contained in a box.”

Morrison further notes that to be considered a subscription box service, these elements are needed: 

“Must be a physical delivery (digital subscriptions can’t be classified as a subscription box). 

Must be a recurring subscription/membership (of any term or frequency). 

Must feature one or more of the following value propositions:

Surprise (at least 1 or more items in the box must be unknown to the customer before delivery). Discovery (slightly different than ‘Surprise’. Discovery-oriented subscriptions don’t have to have ‘mystery’ items, it’s more about consumers ‘discovering’ items they’ve never seen before).

Curation (a thoughtfully picked variety of products related to a specific niche or category). 

Savings (a clear savings on the price paid for the box versus the total retail value of the items inside). 

Thoughtful Presentation (From custom packaging to the way products are arranged inside the box). 

Convenience (convenience cannot be implied solely by the fact that it’s a recurring ‘auto-delivery’. Rather, think of the fresh ingredient subscription boxes like Blue Apron or Green Chef–they deliver convenience in the form of pre-prepared ingredients and recipes).”


According to eMarketer:

“A March survey from AYTM Market Research of 1,000 US consumers showed that while a little over half of respondents said they have used at least one subscription service, almost two-fifths who had used one said they had canceled.”

“’To stay the distance, brands using a subscription model need a very strong point of difference and superior customer service,’ said Sarah Boumphrey, global lead of economies and consumers at Euromonitor International. She added that subscription services also need to come up with other avenues of revenue. For instance, Birchbox, a leader in the space, has brick-and-mortar stores.”

“Differentiation will be even more crucial, as there are signs that suggest the industry’s growth is slowing. Traffic to subscription service sites in January rose 18%, according to Hitwise. Though that’s healthy growth, it’s well off the 56% gain registered a year earlier.”

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