Subscription box business models continue to thrive

As a result of the Covid-19 pandemic, nearly all non-essential brick and mortar businesses have had to shut their doors for nearly four months. In this environment, only businesses with a robust online presence have managed to survive, and even fewer have managed to thrive.

Even as the world returns to a ‘new normal’, with a relaxed lockdown in the coming weeks, it is clear that online sales will continue to be attractive to many consumers, due to both convenience and general safety.

Of course, online business models are nothing new. According to figures provided by Royal Mail, shoppers in the UK made 87 per cent of their retail purchases online in 2018 (not included groceries). That marks an increase of almost 9 percent compared to the previous year.

With 9 out of 10 purchases made online, it’s pretty much a given that any new business requires a strong online presence. In recent years, however, particularly savvy business owners have pioneered a ‘subscription box’ based business model, one which is perfectly positioned for a world quickly moving online.

The subscription box business model, first popularised by companies like US-based Birchbox and Dollar Shave Club, has attracted many startups offering innovative products, as a way to conveniently service a target market which may have otherwise been hard to reach.

The premise is simple, consumers can subscribe to a product online, which typically comes in a package, delivered to their door each week, or month, at a set cost. Many of the businesses thriving in the space have seen success from letting customers get their first month at a low costs, or even free, before they commit to more time on the subscription. ‘Try before you buy’ is, of course, a winning and well-worn tactic in any industry, regardless of business model.

These days, it’s hard not to see why consumers are going mad for subscription boxes. From the customer perspective, they get to try a new product, without a long-term commitment, and they get it delivered straight to their door, taking away the effort and cost of travel to a brick and mortar location.

Take Freshman, for instance, a UK-based company offering hair loss treatments for men on a monthly subscription basis. By offering an easy process from getting approved by a clinician to receiving the first package at your doorstep, the company has managed to provide effective hair loss products to a growing customer base.

It’s not just lifestyle products that are getting in on the action, though. On the contrary, there are a wide range of industries who are benefitting from being able to offer their consumers a subscription to their products each month at a set rate, from health and beauty to arts and crafts and back again.

One US-based company, Creation Crate, provides ready to go science projects for kids, catering to an ever-growing need for tech-ready minds in the workforce. With such varied products available for subscription in different industries, it’s no surprise the market is expected to explode in the coming years.

According to Finder UK, the subscription box market is estimated to grow by 77% to be worth over £1 billion by 2022. Even when adjusted for an uncertain economic outlook, it’s likely that businesses based entirely online, particularly with a flexible business model and products that are easy to engage with, are likely to weather the storm.

The UK government is set to ease lockdown measures further in the coming weeks, so that non-essential stores can serve more customers and the worst hit industries can return to ‘normal’ in some sense. But with an economic outlook that’s far from certain, any business would  be smart to put measure in place to serve a growing online customer base.

With that in mind, in the online space at least, subscription box business models certainly look set to carry on strong into the coming months and years. With a flexible option for consumers that doesn’t need them to set foot outside their door, combined with the ability for companies to quickly target users via digital marketing campaigns, it’s easy to see why the market has a large potential ahead of it.




The Exeter Daily