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The Rise of Subscription Ecommerce & What it Means for Retailers

Posted by Lisa Roberts at 8:23 am in Personalization

Retail has seen an interesting new format crop up in the last five years that Amazon Prime, Birchbox, StitchFix and others have begun to perfect, but it’s a difficult business model to master. Using a carefully finessed recipe that couples automation and machine learning with human-driven curation techniques, subscription e-commerce companies are the poster children of the new generation of retail.

For those constantly on-the-move consumers (which is most people these days), systems like these are gifts from the retail gods. Working women with no time to head to the mall can receive new clothes every three weeks, and college students on a budget can still explore their beauty routines and build their brand loyalty with new sample products each month. Even perishable goods subscription services like Mantry and Plated are picking up speed with young professionals that are too busy to grocery shop but still prioritize healthy, artisanal eating.

mantry websitemantry food subscription boxes

Personalization remains a top retail buzzword, and it’s for good reason. Shoppers today want customized shopping experiences that fit their needs as well as their schedules. Subscription e-commerce models do just that: individually curated products shipped directly to your door. In order to make this a reality, companies moving into the subscription retail space had to find a way to learn about customer preferences and streamline the shopping journey. Otherwise known as: The Birchbox Effect.

Birchbox curates beauty boxes based on a shopper’s skin profile and beauty routine priorities. The company provides a solution to the problem so many of us have: “I want some really cool products that I can try before buying, but I don’t want to look too hard to find them.” When consumers subscribe, they input extensive information on their skin type, complexion, daily routines, and precedence for different facets of beauty products, and powerful automation builds a perfectly curated beauty box full of items relevant to their individual needs.

birchbox website homepage

Similarly, StitchFix taps into human-driven personalized curation to build “style boxes” each month based on detailed profile information and specific commentary from shoppers directly to their stylists. After the stylists build the box with tailored items, streamlined technology and logistics takes it from there! It’s much easier said than done, but StitchFix has a system and it seems to be working well – they’re rumored to reach $200 million in revenue this year. When you think about Trunk Club’s acquisition by Nordstrom at $350 million, the stance on StitchFix’ profitable future looks more than just OK.

 

stitch fix website homepage

All of this comes down to one thing: customized convenience. It’s a strong position to hold in the retail market, and highlights an opportunity for standard retailers to connect with their shoppers in a new way. While subscription models are convenient, what they’re really doing is bringing the ultimate personalized experience to the shopper for specific retail niches. With the right strategies and technology in place, online and brick-and-mortar retailers can still bring that dynamism to the shopping experiences they offer. Ramping up a technique to listen to your consumers and answer with a real, relevant solution means customer satisfaction and brand loyalty. At a recent SXSW Interactive panel session, the founders of two popular retail brands agreed that customized communication and engagement with customers is critical. Yael Aflalo, CEO and founder of Reformation Apparel said that a nice, honest communication and tone resonates with her customers, and that they use words that they would use with their girlfriends. Tina Craig, the CEO and founder of Snob Essentials, noted that the key to her company’s success is pivoting based on customer feedback.

So while you don’t need to implement a subscription model to see success, the personalization powering those business models and the intimate connections made with customers should be the real key takeaways for retailers.

 

Photo credit: Mantry.comMom Blog Society / Birchbox.com / StitchFix.com
lisa roberts
ABOUT THE AUTHOR

Lisa Roberts is a 15-year Ecommerce vet who’s worked with technology innovators, including Edgecase, who are building real solutions for hard retailer problems. Her experience working inside a retailer, agency-side and vendor-side give her a unique perspective on how to innovate at the pace of consumer evolution while remaining focused on delivering proven results.

Follow Lisa Roberts on Twitter @lisadoesaustin

  • http://www.cratejoy.com Amir Elaguizy

    Hey Lisa, great write up.

    I totally agree that personalization is a huge part of the value proposition of subscriptions. It makes sense if you think about it – there was this huge fragmentation of eCommerce in which thousands of niche retailers sprung up (think nasty gal, boots & bourbon, betabrand, etc). Discovery becomes very difficult in such a fragmented landscape. Subscription commerce is the equal and opposite reaction to that flood of consumer choice: “Can someone who knows what is good just send the best stuff for ME?”

    At Cratejoy we see personalization as one of the absolute most important things our merchants are asking for – consumers too!

    Great article!

  • Gwazoo

    Love the article, personalization is huge for subscription ecommerce companies. We are working on that too at http://gwazoo.com