Right now, there seems to be a subscription box for every interest from hygiene to Japanese snacks. Subscription retail has gained popularity over the past several years, but is it an effective marketing tool?
Case studies point to “yes,” depending on the intended result.
For the uninitiated, subscription boxes offer specially-curated collections of products that correspond to a specific theme or category. Brands like Dollar Shave Club and Birchbox helped pave the way for marketers to reach consumers through risk-free samples.
“The subscription and retail businesses are very important to who we are today,” Bark & Co. founder Matt Meeker told the New York Business Journal. Meeker’s New York company is the startup behind dog-themed subscription service BarkBox.
Anime website and community Crunchyroll recently partnered with LootCrate to provide discounts on streaming video subscriptions and exclusive merchandise.
“We’ve purposefully ventured into new areas where we know our audience is engaged,” Eric Taylor, senior manager of marketing for Crunchyroll told AListDaily. “Loot Crate was a logical partner given its demographic and the content of its products, particularly its anime subscription box. As we continue to grow and seek out new audiences, companies like Loot Crate make strategic sense to engage with and discuss how we can work together to super serve each of our audiences.”
Crunchyroll would not divulge any new subscription metrics related to the partnership, but Taylor said it observed positive feedback from both the Crunchyroll and LootCrate communities as a result of the activation. The anime site has also partnered with JapanCrate for a free giveaway. In this case, Crunchyroll was looking for new ways to engage with their community and the subscription box delivered.
As retail goes digital, department stores are feeling the pinch. JC Penney has partnered with subscription service Bombfell to custom-pick clothing with the help of a stylist. The first subscription boxes will cater to Penney’s big and tall customers, a demographic the company says is quickly growing across the US.
“We think this demonstrates we are meeting the evolution of the next phase of retail,” a JC Penney spokeswoman told CNBC. “We’re definitely becoming more digital . . . [and] we are leveraging the strength of our stores.”
While the activation is still in the beginning stages, JC Penney may find its subscription model effective if it taps into an underserved demographic and moves merchandise that might otherwise collect dust in a dying mall.
Analyst firm NPD Group identifies fashion is a particularly lucrative space for subscription retail. In a recent survey, consumers told NPD about their interactions with and awareness of subscription box services. While only 15 percent of consumers had ordered subscription boxes, another 14 percent hadn’t yet ordered them but planned to, and 35 percent didn’t even know what these services are.
NPD also explored whether this business model would raise awareness within target demographics compared to the retail industry as a whole. The company found that beauty subscription service Birchbox increased its penetration among 18- to 24-year-olds from 2.3 percent in Q4 2014 to 4.1 percent in Q4 2015. This share point increase was stronger than that of Amazon, Nordstrom, Macy’s, and Ulta.
“We have entered a new world of retail where the traditional leaders are faced with unconventional channel competition, and subscription services are the newest player,” said Marshal Cohen, chief industry analyst with The NPD Group.“Consumers are more critical about the purchases they make today and no longer purchase just for the sake of purchasing. The personalized approach of subscription services complements the shift toward more prioritized spending.”
