I remember when my parents received the “Fruit of the Month” club subscription as a Christmas gift from one of my dad’s clients. As a kid, I thought it was so cool to see a big box arrive each month and wonder what fruit was inside. Pineapples? Apricots? Unfortunately, the novelty wore off when we were sent apples for three consecutive months. Granted, they were different types of apples, but they were still just apples.
Subscription services have changed a lot in recent years thanks, in part, to Amazon. Nearly half of U.S. households have an Amazon Prime membership – that equates to about 54 million households. On average, Amazon Prime members spend about $1,100 a year, not counting the $99 membership fee. Entrepreneurs learned quickly that consumers were willing to wait for delivery if the quality of the product was high and the cost was low. Enter the subscription box phenomenon. It’s estimated there are over 2,000 subscription retailers and more coming online every day.
Within the past few years, not only has subscription box services grown, they’ve split into unique categories catering to consumers of every delivery need and type. There are services catering to replenishment (Dollar Shave Club), sampling (Birch Box) and curation (Stitch Fix), each providing consumers with a variety of delivery options and price levels. The ease of use and the ability to choose between “surprise me” or “this is exactly what I want” formats have resonated with consumers.
In 2016, eMarketer published results from a Hitwise survey that analyzed the activity of 127 subscription box sites on its platform. They found that visits to subscription box sites in the US have grown in the past three years by nearly 3,000%. That’s a jump from 700,000 monthly visitors in January 2013 to 21.4 million in January 2016! This category is so large, there is an annual summit cleverly called “Subscription Summit” that brings together the biggest success stories of the industry, along with large sponsors like FedEx, Groupon and various other logistic and software companies.
What we’re seeing is a major shift in consumer behavior and it’s having a big impact on CPG brand profits and their brand awareness levels. Store sampling and FSI’s used to be foolproof ways to drive consumers into stores. Now, word-of-mouth, social media and bloggers drive the “buzz” along with enticing “first month free” offers and discounts. CPG brands can no longer rely on consumers aimlessly wandering the aisles to discover new products and offerings. Our time-crunched society has also led the proliferation of mobile apps that can map consumers through each step of their grocery store experience. Or better yet, there are services that do the shopping for you (Instacart).
For Conscious Consumers, subscription box services and mobile apps provide the opportunity to truly vet product claims and environmental impact. These new outlets can showcase like-minded goods and services that mirror the products Conscious Consumers already love. They also provide full transparency with detailed customer reviews and commentary. For CPG brands, it’s become more difficult to become a part of the acceptable set for Conscious Consumers. Brands like General Mills are trying a variety of tactics to get there, like developing or buying Conscious Consumer brands that will be included in subscription box services. Others are using platforms like Ibotta and Checkout51 to give deep discounts for first time trial or simply to view a video.
I believe we will eventually hit a level of fatigue and consumer wear out. And I believe we are at the height of the subscription box craze. Still, once the novelty has worn offer, many brands may have suffered major losses, making recovery difficult. The biggest lesson in all of this is brands need to be constantly innovating and/or partnering with innovators so they can deliver on that unique, personalized customer experience.
At CCF, we have spent years understanding this behavior and educating our clients on the new “path the purchase.” Our Think Reports provide great detail on how Conscious Consumers think and behave. But, we can also dive deeper. We are able to slice and dice more than four years of data to fit your category-specific needs and interests. We are problem solvers, so give us a call and let us know how we can dive deeper for you.