Inside the Booming Business of eCommerce Subscription Boxes
The Rise of Subscription E-Commerce
Across the country, people are eagerly awaiting subscription boxes at their doorsteps. These custom-made boxes contain anything from makeup and beauty supplies to healthy snacks, coffee and workout wear, and arrive on a regular schedule. The eCommerce subscription box business is growing rapidly as more customers decide to give them a try.
There are 2,000 subscription box services out there right now, according to My Subscription Addiction. Subscription box website visits alone have skyrocketed from just over 700,000 in 2013 to 21.4 million today––a 3,000 percent increase. Large existing retailers are taking note of the industry’s growth. Starbucks, Adidas, Amazon and Macy’s are just a few that have decided to jump into the game.
Beauty products lead the way in this industry. Seven of the top 10 subscription box services are beauty-related, and the top three most popular boxes overall are beauty brands Ipsy, Birchbox and Julep Maven. Even Walmart has launched a beauty box business.
The subscription craze isn’t anything new. Magazines, newspapers and local food delivery started it all. The first modern e-commerce subscription service, Birchbox, launched in 2010 and grew 179 percent in just 2-1/2 years to 800,000 members. In comparison, it took Columbia Record Club a whopping 41 years to grow its business by 196 percent. Impressed by the industry’s potential, more businesses entered the subscription box market in 2011, catering to niches like moms and babies, dogs and even narrower markets like gold mining and survivalist gear.
So, who’s most interested in these services? The typical subscription box website visitor is their early forties and makes $78,436 a year. Nearly six out of 10 visitors are women. 8.6 million Americans, 4.3 percent of the online population visited subscription box websites during the 2015 holiday season.
While the industry is booming, it isn’t a sure-fire bet for success. Thirteen percent of eCommerce subscription services tracked by My Subscription Addiction have gone out of business. Heavy product discounting, the novelty of the find among customers and high packaging costs are just a few factors sinking some companies.
To stand out from the competition, e-Commerce subscription services are creating boxes that not only address practical shipping needs, but that also contain embellishments like fabric liners and bows that reflect the brand’s identity. As the complexity of the box increases, so do the manpower hours needed to assemble those boxes. Many subscription services are turning to packaging companies to automate and streamline the packaging process for them so they can focus on other priorities.