From meal kits to wardrobe upgrades, new entrants in the increasingly crowded subscription commerce space keep emerging. Just this week, auto-replenishment company Harry's launched a women's line of hair removal products called Flamingo.
According to a McKinsey study released in February, subscription commerce retailers grew sales from $57.0 million in 2011 to over $2.6 billion in 2016. Established companies, including big-box stores, supermarkets and consumer packaged goods (CPG) conglomerates, have gotten on board for a piece of the action. To wit, in 2016, Unilever bought Dollar Shave Club for $1 billion, and last year Albertsons acquired meal-kit brand Plated for over $200 million.
But how do consumers feel about them?
At the beginning of the year, Salsify asked US digital shoppers where they planned to do more shopping in 2018. Subscription services were cited by only 8%, though still ahead of using social media and voice-activated assistants and smart speakers.
McKinsey identified three types of subscription services: replenishment, curation and access—all attracting users for different reasons. A financial incentive was most persuasive in signing up for automated delivery of diapers or cat food. Trusted recommendations or the desire to try something new drove interest in something like a beauty box. And all three of those criteria contributed to trying a members-only clothing and shoes site like JustFab.
Users cancelled replenishment subscriptions primarily due to product quality and wanting to buy when they felt like it, while curation and access subscriptions were dropped most because of poor value.
Beyond those three categories, subscriptions cover a wide variety of services, some more integral to daily life than others. Close to three-fourths of US paid subscribers subscribe to a Netflix-type service, according to Fetch, while 18% subscribe to a fashion or beauty box service.
The ability to receive trial sizes of often expensive products like makeup or fragrances is one reason why beauty boxes are popular, though sampling doesn't apply to all subscription commerce offerings. Per GPShopper data, very few US internet users said they discovered a new favorite brand (8%) or became a repeat customer (7%) because of a subscription box.
That said, roughly a quarter of US internet users would be concerned if they lost access to those three categories of services, which isn't an insignificant figure.
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