Columnist John Donnelly III looks at the effect the rise of subscription box services has had on how consumers shop — and how retail marketers should adapt.
If you’re an impulsive person, online shopping might be your best friend, worst enemy or a little bit of both.
In the past year in the US, shoppers spent more than $300 billion online, and their spending in the past quarter accounted for 8.4 percent of all retail revenue in the US. This holiday season is predicted to be even bigger than last for online sales, with $92 billion expected to be spent.
As this trend has gained momentum in the last two decades, companies have tightened their supply chains, expanded delivery and payment options and launched creative strategies — even sub-industries — to hook and retain customers. For example: subscription boxes.
Every month, tens of millions of Americans receive a curated delivery that supports or reflects one of their hobbies, interests, pets, food tastes or other investment. From meal kits and designer clothes to comic books and cat toys, the subscription economy is booming, having grown 3,000 percent in the last three years alone. However, while its rapid rise is obvious, its driving factors’ eventual repercussions on the retail industry have yet to be seen.
To run effective marketing campaigns in the midst of the subscription economy, retailers should look no farther than the customers buying into the trend.
Below are three questions about subscription box services that every retailer should know answers to, along with insights from social media analysis to help them step inside customers’ minds.
How did the subscription box craze start, and where is it going?
A recent Crimson Hexagon study (registration required) found that the beauty industry, spearheaded by Birchbox, was one of the first market segments to gain traction in the subscription box landscape. Today, it remains the most discussed category by consumers on social media.
From 2010 to 2012, the company dominated social media conversations about subscription box services, alongside curated snacks provider Graze. In 2013, the trend exploded with new players and a rapid rise in popularity; today, the playing field is packed and still expanding.
While a broad range of subscription box categories have already become thriving businesses, the diversity of these offerings is likely to keep expanding in the near future. As the market continues to grow, delivery options, customization and other variations are also likely to continue gaining speed. Whether they’re launching subscription services or competing through a traditional channel, retailers should consider how their offerings bring value to customers and stand out from the crowd.
How do subscription box sellers win their audiences?
To get on consumers’ collective good side, retailers need to get to know their targets. For example, social media analysis shows that the audience for subscription box services skews toward female consumers over the age of 35 and that Twitter is the top social channel used for discussing subscription boxes.
It’s also critical for brands to consider their ideal consumers’ other interests. For example, while consumers discussing Birchbox on social media are also likely interested in subjects like parenting, management and entrepreneurship, fans of Ipsy, a competitive makeup box, tend to share information about YouTube, homework and Snapchat — showing that Ipsy’s audience skews considerably younger.
As a whole, however, there’s a clear theme to all consumer sentiments shared about subscription boxes: surprise and excitement. Receiving boxes, regardless of product category, makes customers feel like Christmas takes place every month.
Social posts about subscription boxes tend to express positivity and joy — and those are themes every retailer should take to heart while designing marketing campaigns that resonate with customers on a deep level.
What factors are driving subscription box success — and does the trend have room for new entrants?
Shifts in consumer demographics, advances in technology and new options for shipping have all played major roles in warming up an audience for subscription box services. However, with the subscription market still in rather early stages, there continues to be plenty of room for new competitors — and the biggest opportunity awaits traditional retailers who have yet to enter the space.
Ultimately, the success of box subscriptions sheds light on a gap in the retail landscape, and many existing retailers are working to bridge it. Heavyweight brands such as Macy’s and Starbucks — and even big-box stores like Walmart and Target — have tapped into customer data to launch subscription boxes that connect users with the products and perks that inspire loyalty beyond traditional online sales and brick-and-mortar stores. Established brands also have the resources necessary to develop and scale subscription services, which can create challenges for startups.
For marketers, the rise of subscription box services makes it clear that consumers are interested in convenient, curated and exciting ways to purchase products. In every industry, brands can take a cue from this trend by working to personalize the retail experience, listening to customers on social media and analyzing the sentiments they share about products, shopping habits and general interactions with a service or company.
As a result, startups can compete on the same playing field as established global brands — while traditional retailers find new ways to connect with customers.
Some opinions expressed in this article may be those of a guest author and not necessarily Marketing Land. Staff authors are listed here.
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