News & Insight

Signed, Sealed, Delivered: The Rise of Retail Subscription Services

Subscription-based retail delivery companies like Stitch Fix, Dollar Shave Club and Birchbox have exploded and are changing the way consumers shop. A recent study shows subscription box sites have grown nearly 3,000% in the past three years.

But why?

The overall satisfaction level is high and minimal customer effort is required. Value and convenience drive customer loyalty and revenue, and subscription-based consumer groups are one of the fastest growing online retailer segments in the marketplace.

This new subscription model owes its success to the balance of value it provides to both the company and the customer.

For the customer, convenience and the element of surprise are attracting differentiators. Some consumers become overwhelmed by too many product choices available online and in-stores. They would much rather leave the selection process to the experts and avoid spending time on research.

For business, the value lies in the ability to predict revenue through recurring sales and insights into customer preferences. Subscription models are as much a source of data as they are a retail platform. Information collected from repeat orders help build strong customer profiles and create more opportunities for personalization. Brands can use the historic data to provide personalized orders based on unique preferences and customer data. Ultimately, fostering long-term relationships built on trust and brand loyalty. With consumers driving their own shopping experiences, the subscription model gives retailers both the flexibility and data needed to give customers what they really want.

Subscription box services can be powerful, brands must offer a combination of compelling products and strong customer service to support it. Sephora, Starbucks, Lancôme, Walmart and Adidas recently launched subscription box services. This not only validates the demand, but also shows signs that competition is on the rise. Either way, subscription boxes fulfill a consumer desire and they don’t seem to be going away.