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~ Practicology ~

SUBSCRIBE

Text: Joanna Perry, Global Head of Marketing at Practicology – a Pattern company // Photos: Practicology

Customer loyalty is hard-won, so enterprising direct-to-consumer businesses have
created subscription offers that foster long-term relationships. Below, we share

findings from our new report that profiles 16 of the most interesting models.

ith the growth of direct to consumer • Access: Providing customers with products that they
e-commerce, one trend – subscription can’t get elsewhere, or at a lower price through
W boxes - has generated a lot of buzz in subscription;
North America, and more recently Europe too.
• Curation: Providing inspiration with an edited
High-profile brands such as Birchbox and Dollar Shave selection of products that may be personalised to
Club have created online subscription businesses that customers’ tastes;
appeal to customers on both sides of the Atlantic; and
15% of American online shoppers have signed up for at • Replenishment: Providing convenience through
least one e-commerce subscription service, according to automating the ordering of items that customers
McKinsey. regularly require.

This has given executives from a range of consumer Some of the examples aim to excel at one of these aims
product businesses the idea that a subscription model is – such as Amazon’s Subscribe & Save proposition for the
one way they can compete against established online and replenishment aim. Others, such as UK health snack box
offline retail channels, and form direct relationships with provider, Graze, meet all three of the aims, at least to some
their end consumers. degree.

We’ve profiled sixteen subscription business models Subscription success
from around the world in our latest piece of e-commerce Each of the sixteen examples provides a different form
insight, to highlight best practice and provide inspiration of inspiration, but there are some clear themes from our
to consumer brands who want to create e-commerce research that are worth highlighting.
subscription business models

of their own. Below, we
Battling for beauty subscribers
outline some of our key
Birchbox has been overtaken in subscriber and revenue terms by its beauty sampling subscription competitor,
findings, as well as showcase
some of the stories behind Ipsy; which you may not have heard of as it’s still focused on its home US market.
brands that are doing
subscription well. With its focus on harnessing the power of beauty influencers to aid its customer recruitment, combined with
significant personalisation available, Ipsy is achieving annual revenue of US$500 million.
Why subscribe?

When analysing the sixteen
Its in-depth beauty quiz - which new subscribers complete as part of the sign-up service - allows them to
examples, we’ve looked at
both the proposition and the express preferences regarding the brands and products they like, as well as how often they prefer to receive
business that has introduced certain types of products. In addition, Ipsy allows subscribers to directly choose one item from a selection that
the idea. Subscriptions they will receive in their beauty box each month.
succeed where they deliver
against one of the three
This attention to detail in matching customers to products will lead to reduced customer churn; which has
following aims. They are:
allowed the business to grow its subscriber base to more than three million.

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