Over recent years, the subscription box industry has absolutely exploded in popularity, setting a trend that doesn’t look likely to change any time soon.
Just look at the facts: during the five years between 2011 and 2016, subscription-based sales rose from £44 million to just over £2 billion. That represents an incredible growth and one which hasn’t slowed down in the years that have followed. Leading experts from the Global Research and Advisory Company now even predict that 75% of all companies globally will offer some type of subscription-based service by the year 2023, going to show just how powerful the subscription movement really is.
But what are some of the reasons behind the success? And what is likely to happen over the coming year? In this article, we look to answer both these questions and more, highlighting five key trends likely to define subscription-based services over the coming months. Let’s get started.
1. Men > Women.
According to a study by McKinsey, entitled ‘Thinking Inside The Subscription Box’, the demographics of people who sign up to subscription-based services are typically those aged between 25 and 44 years old, with annual incomes of between £38,000 and £77,000. Similarly, more than 60% of subscribers are seen to be female, compared to just 42% of males.
However, these male subscribers are much more likely (42%) to have more than three active subscriptions, compared to just 28% of females. This corresponds to another study conducted by Royal Mail which found that 30.6% of men signed up to subscription box services, compared to 24.3% of women. By the year 2022, they also predict that more than two million males will have subscribed to a male grooming-based subscription service, such as Dollar Shave Club.
2. Niche > General.
The subscription box market is already being led by niche products like coffee, milk, tea, food, etc., and this doesn’t look set to change moving forward. However, one area worthy of keeping an eye on is the growth of subscription services related to hobbies. Again according to the McKinsey report, hobby-based subscription boxes accounted for approximately 15% of the market back in 2018.
Niche female products, like period boxes and lingerie-related subscriptions, were also seen to account for a larger market share than more general clothing or fashion-based services. Therefore, moving forward, the more niche the product on offer is, the more popular and profitable it’ll likely turn out to be.
3. Quality > Quantity.
When it comes to subscription-based services, it certainly appears that less equals more. Having too many products stuffed into a subscription box is likely to put customers off and leave them feeling overwhelmed.
Subscription services like Dollar Shave Club and HelloFresh are two great examples to follow, offering only a select number of services that give customers a quick and easy choice over which products they’d like to pick. In fact, according to consumer research, 28% of subscribers said that the personalised experience offered through subscription-based services was the most important factor for them remaining a subscriber.
Stitch Fix are a company who have experienced the benefit of personalisation first hand. After designing a digital questionnaire to get to know their target consumer prior to signing up, the fashion-focused subscription service saw a 25% increase in customer acquisition during 2018.
Similarly, with climate change the talk of the town these days, the sustainability of the company in question can have a big impact on customers. Therefore, utilising effective eco-friendly packaging in subscription-based services looks likely to become more and more important as time goes on, with many companies now looking to replace single-use plastic with a more environmentally-friendly, smarter alternative.
4. Reviews > No Reviews.
Research shows that reviews and word-of-mouth recommendations are imperative when it comes to getting new customers to sign up to subscription-based services. However, reviews can also help in terms of customer retention as well.
For example, HelloFresh encourages its customers to leave comments and feedback on the meals they offer, making them feel as if they’re part of a specific community of customers. This feedback also helps no-end when it comes to consumer research, enabling customers and vendors alike to know which products are the most or least popular.
5. International > Local.
According to the Royal Mail’s survey, almost 90% of subscription businesses make some of their sales abroad. Therefore, the expansion of these services across the globe looks set to grow more and more as time goes on.
One example of this comes through the UK subscription box known as Graze. Since expanding into America, this nutrition-based service has thrived, receiving more than 150,000 US subscribers in the initial three-month period from its 2014 launch. Nowadays, it’s one of the biggest players there is when it comes to snacking in the US.
