A subscription box is a recurring delivery of niche products. Subscription boxes are a marketing strategy and a method of product distribution. Subscription boxes are used by subscription based ecommerce businesses, referred to as "subcom" for short, which follow a subscription business model. They target a wide range of customers and cater to a variety of specific needs and interests. The subscription box industry is small, so there exists minimal data. It is estimated that there are 400 to 600 different kinds of subscription boxes in the United States alone and more overseas. Subscriptions vary in both cost and frequency, making them more accessible to a greater range of customers with different socioeconomic backgrounds. Subscription boxes tend to range from $10 to $100.
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History of subscription boxes
Various subscription commerce companies are growing rapidly. Since launching in 2011, Quarterly.co has doubled in size every six months. NatureBox, which launched in 2012, grows by 50-100 percent every month and BarkBox's subscribers grew from 1,500 to 55,000 between 2012 and 2013. According to Forbes, Birchbox, which is arguably the most recognizable service and valued at a reported $485 million in April, 2014, led the subscription box trend with its 2010 launch. Birchbox's model of providing customers with samples of personal care products in order to up-sell customers into buying the standard sizes of the sample products they enjoyed has proven to be a successful marketing tool. Birchbox has reached nearly 400,000 monthly subscribers and has inspired many other companies to start utilizing subscription boxes.
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Customers
Demographics
Online store visitors
- 92% customers who have not made a purchase
- 4% return customers who have made one previous purchase
- 4% repeat customers who have made more than one previous purchase
Source of revenue
- 59% new customers
- 11% return customers
- 30% repeat customers
Benefits for customers
Customers often receive discounts on products by buying them through subscription boxes. Many subscription boxes are offered in tiered levels of value as well as frequency of delivery. This allows subscription boxes to be affordable to a wider range of customers. Subscription boxes often have products in them that are of greater value than the subscription allowing customers to save money on products they already know they enjoy as well as try new products without having to risk spending as much on a product they may not enjoy.Choices are minimized for customers which prevents them from becoming paralyzed and makes decisions simpler to make. Because subscriptions are automated after activation, continuing to receive the product and maintain the subscription takes minimal effort for the customer. Customers are more satisfied when the purchasing process requires less work.
Discovery
Subscription boxes can be a fun experience for customers. Customers enjoy the surprise, and they discover products they might not have otherwise. This allows customers to try products and brands risk free. The increased exposure to new products helps customers discover optimal products for their preferences and needs. While only some subscription boxes have return options, there exist places such as blogs to exchange the unwanted items.
Convenience
Convenience subscription boxes provide customers with products they are already familiar with, automatically, and conveniently through reoccurring payment processing. This allows customers the ability to increase their amount of free time, because customers no longer need to take the time to travel to a physical store to make their purchases. Instead, customers place their initial order online, the products are delivered directly to them, and they do not need to repeat the ordering process, because products are delivered for the duration of the subscription they have agreed to.
Disadvantages for customers
Customers often do not like every item in every subscription box they receive, but this may help to increase excitement when they receive items they love and still enjoy discovering new items. This can become problematic when customers experience vendor lock-in. When a customer subscribes to a monthly service for a set time period, the customer is locked into their subscription until the time period has elapsed. Some subscription box companies make it a hassle to cancel a subscription. Companies may do this by not allowing a customer to cancel the subscription online and instead require the customer to cancel the subscription over the phone. Some companies charge early termination fees. This hassle can benefit subscription box providers, because for some customers, the hassle can be enough to keep them subscribed. Since subscriptions are often frustrating to cancel and sometimes require a minimal subscription period, subscription boxes are not suitable for single box purchases. Despite this, some customers still make purchase single boxes.
Environmental effects
Monthly subscriptions send packages every month to their subscribers. These packages range in a wide variety of sizes and shapes and contain numerous contents. Critics of subscription boxes have examined the environmental impact of subscription boxes. Shipping goods over long distances require energy, however the energy used to send subscription boxes is not always more than purchasing products locally. One example of this can be seen with streaming video versus hard copy DVDs. Videos and downloads can be part of monthly subscription boxes. While Netflix is a monthly subscription but not a monthly subscription box, it serves as a good example for the contrast. Netflix streams movies that requires 78% of the energy needed to ship a DVD, but streaming the video accumulates a carbon footprint that is roughly 100% higher than the hard copy DVD and the impact of shipping it. The carbon footprint comes from the intensive energy use from the data centers that are in control of streaming the videos into peoples homes. Along with streaming, contents in subscription boxes may not always appeal to the subscriber. This leads to a waste of product, and transportation costs. This affects the environment in the form of energy needs to get product to the customer, the natural resources to make the product, and the disposal costs to get rid of the product. Especially because some of the products that are sent can be purchased.
Business costs
Shipping costs and the need to constantly innovate present challenges to retailers offering the subscription service.
Source of the article : Wikipedia
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