Understanding subscription commerce trends will help you figure out where to jump in and find a niche that serves your customers’ needs and your company’s bottom line.
Each year between 2013 and 2018, the subscription commerce market grew by more than 100 percent. Since the early 2010s, thousands of companies — many of them heavily backed by venture-capital firms — have sprung up to provide curated convenience for customers.
If you’re a podcast listener, you’re probably quite aware of how well many of these companies have taken advantage of the medium — an intimate listening experience for information-seeking audiences — to promote subscription commerce kits. Dollar Shave Club and Blue Apron might have led the pack, but podcast listeners are also likely to have heard ads for Birchbox, FabFitFun, Curology, Lola, and Athena Club.
Direct-to-consumer, subscription-based skincare company Curology, for instance, has been able to think outside the usual marketing box. You might’ve even seen Instagram and YouTube influencers getting deals to promote their hyper-personalized products.
If it sounds like a lot of those services are geared toward younger, more affluent women, you’re right. Women are the majority of subscription commerce customers, and in general, subscribers fall between 24 and 44 years old with incomes between $50,000 and $100,000.
Drill into Demographics
To understand your market — and your potential customers — even better, it helps to uncover a little more nuance in the demographic data.
Gender: Women Dominate, Men Want More
The subscription box market is dominated by women — both subscribers and as targeted customers. Research indicates about a third of all subscription boxes are geared toward women, a figure that’s jumped about 13 percent over the past two years. The targeted marketing works. Women make up about 60 percent of subscribers.
But don’t discount the dudes. Men are way more likely than women to subscribe to three or more services. 42 percent of men compared to just 28 percent of women. Money and personal taste are factors, but this gender split could also suggest that men are more inclined to click subscribe rather than have to head to the store (or back to the website) every time they run out of a product.
Indeed, a 2018 survey found that women prefer online shopping, and men tend to prefer shopping in person at brick-and-mortar stores. But whereas women are generally more likely to browse online or in-store, men generally want to find, buy and flee. They might prefer in-person shopping, but they don’t want to stick around too long. That behavior likely translates into a desire for a streamlined subscription e-commerce and autopayment experience as well.
Men are a growing subscription commerce demographic in the UK, too, particularly for personal-care kits. A 2019 report found that more men than women had signed up for subscription box services and predicted men’s grooming subscription boxes will hit the 2 million mark by 2022.
Finances: Don’t Ignore Subscription Inspo — or Boomers
Slick marketing that targets Millennials on Instagram and in podcasts has nabbed a pretty affluent subscriber base. Regardless of generation or bank account, though, customers want the best value their money can buy.
Just look at customers’ inspiration for clicking ‘subscribe’ in the first place. Whereas recommendations, personalization, and the desire to try something new drive curation and access-style subscriptions, customers most often subscribe to replenishment kits because of the financial incentive. Often some kind of bundle discount and the value for the money.
Naturally, the main factor behind canceling any of the three types of subscription-services is dissatisfaction with the product or experience. That dissatisfaction could include no longer seeing the value or preferring to shell out money only when customers decide they want to purchase an individual product.
Speaking of value, most subscription boxes — as opposed to monthly replenishment kits or subscriptions to individual products — cost customers an average of between $15 to $30 per box, but a range of price tags exists out there. And considering that just 55 percent of online shoppers who look into subscription e-commerce actually subscribe, a lower barrier to entry could help convert more of your shoppers to monthly subscribers.
Offering discounts or a range of price tiers might be able to get some of those undecided shoppers off the fence. For instance, while Baby Boomers make up less than 10 percent of subscription box recipients, a full quarter of them were considering signing up in 2018. Millennials and Gen X might be leading the subscriber pack, but targeting Boomers through marketing and a seamless, intuitive online experience can pay off: They hold 80 percent of personal wealth in the U.S. and spend $7 trillion per year on goods and services.
Worried about what a smaller price tag means for your bottom line? You can always consider offering additional options and upsells. Subscription meal-kit service Sun Basket, for instance, gives subscribers the opportunity to add snacks, salads, and other items to weekly meal kits.
Geography: Think Urban, Act Global
In the U.S., subscription commerce customers are concentrated in urban areas and in Northeastern states. This makes sense: A 2019 study found that Millennials prefer city dwelling, a trend that began with their generational predecessors, Gen X. And while we’ve established that Boomers hold most of the wealth, as of July 2019, Millennials are America’s largest generation.
But Americans aren’t the only ones who want the convenience of subscription commerce. According to a 2019 study out of the UK, an increasing number of subscriptions are coming from across the pond. Regardless of their home base, nearly 90 percent of subscription businesses have overseas customers. Germany-based meal-kit service Hello Fresh, for instance, grew its revenue by 52 percent in 2017 after expanding globally. It’s now the leading meal-kit provider in the U.S.
Look to the Future
You know that regardless of age, geography or gender, subscribers love customization. Trends come and go, but tailor-made subscriptions that combine surprise, convenience, and utility with great value are a sure bet. As your plans to expand into subscription commerce take shape, there are plenty of ways to set yourself apart.
- Consider a cause
The same demographic that loves subscription services also loves to support ethical companies that practice sustainability and give back. More and more consumers — Millennials and Gen Z in particular — opt to support brands that are connected to a social cause. This is a trend that’s not going away anytime soon. Help your customers feel like they’re helping others.
- Judge a box by its cover
Based on the type of subscription service and its price tag, customers have come to expect a certain level of unboxing experience when they open their curated box of clothes or even replenishment kit of skincare products. Pay attention to design, quality of materials, and the way your products appear once the customer opens the box. Fido might not mind if his monthly delivery of toys and treats looks basic, but attention to detail when it comes to presentation is the kind of thing that adds value for subscribers.
- Look for and fulfill unmet needs
No matter how great your products are, if your subscription service isn’t meeting a need, you won’t get far. For instance, while 25 to 44 might be the prime age target, older folks don’t enjoy personalization any less. And the potential for educational or just plain fun kits for children is essentially endless. But you don’t have to start an entirely new trend. Even if you’re going head-to-head with companies offering similar products, your inclusive marketing, brand identity, and fun perks can be enough to set you apart. In general, when you look at the subscription commerce market, it’s always good to ask yourself: What else can I bring to the table? What audience can I serve that might be overlooked?
- Find any excuse to offer discounts
Customers will continue to expect a reward for subscribing, whether that’s an upfront discount for signing up, ongoing discounts as part of bundling individual products, or progressive discounts with each subscription tier. That might mean offering better discounts if they order bigger bundles or pay for longer subscriptions upfront, which is great news for you! That means more revenue upfront that can be reinvested in your business. Free trials can help attract new customers by taking the uncertainty out of testing out a new service. Plus, once they’ve signed up for a trial, you can keep them in the loop via email about special offers and the benefits of using your service.
- Get help if you need it
If you’re not already set up to promote and scale your subscription boxes, services like Cratejoy or Subbly can help. Cratejoy is essentially a subscription commerce marketplace that helps you sell, promote, and market your products through their site or your own. They even guide you through the process of getting Facebook and Instagram ads, helping you partner with influencers, and developing themed email campaigns. Subbly is a platform that also helps you get your subscription commerce business off the ground and manage its growth.
- Ask for feedback
Finally, give customers the option to leave ratings and reviews. Then bust your butt to provide a service that keeps them happy enough to actually leave one. Ninety-seven percent of consumers say reviews affect their purchasing decisions. Never discount the power of word of mouth to drive e-commerce trends.
What subscription commerce trends are you seeing? Let us know by dropping us a line at sales (at) owd (dot) com.