Subscription boxes are a recurring delivery of niche products as part of 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.
History and appeal
One early subscription box available was called The Sampler, which first became available in 2004 and offered samples of products from independent web-based artists, crafters, zines and shops.
Granny's Attic of Mobile based in Alabama began offering subscription services from its website, www.perfectpaintedponies.com in 2005 specifically for customers who collected various artistic painted ponies.
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 upsell 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.
Part of the appeal of subscription boxes is that consumers 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 are places online to exchange the unwanted items.
- 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
- 59% new customers
- 11% return customers
- 30% repeat customers
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. 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.
Shipping costs and the need to constantly innovate present challenges to retailers offering the subscription service.
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