industry

Royal Mail’s subscription box report finds a booming sector attracting bigger brands 


Its latest UK Subscription Box Boom report finds low barriers to entry in the market have meant that budget-conscious entrepreneurs can establish and build a successful business. That is now sparking interest from bigger players including Gillette and Sephora hoping to emulate the performance of subscription companies such as Dollar Shave Club and Birchbox.  Yet, subscription box companies have not always considered big retailers and brands to be their direct competition and have found ways to work in collaboration. Brands such as Graze are now stocking their products in conventional retail stores.

The business model presents significant opportunities for international expansion, according to the report which finds 90 percent of subscription businesses make at least some of their sales overseas.

Moves by overseas brands, including Birchbox, Harry’s and Dollar Shave Club to enter the UK market have been mirrored by the efforts of UK brands to conquer territories abroad.

Graze garnered over 150,000 US subscribers within just three months of its launch in the USA in 2014 and now enjoys a major presence on the US snacking scene.

Popular markets for international sales among businesses include Ireland and France, where 46 percent of subscription businesses have an overseas presence. Germany (39 percent) and Spain (31 percent) are also common destinations for international entrants

Churn, the proportion of customers who decide to cancel, is one of the biggest challenges and a driver of innovation.

This includes diversifying the business model to reduce reliance on subscriptions, as well as launching new products and features.

Innovation can sometimes be as simple as keeping customers engaged using a magazine.

Shaving subscription business, Cornerstone, for example, credits the launch of its “15 minutes” male lifestyle magazine with a major reduction in its churn rate.

Similarly, among beauty box retailers, there has been an increasing trend towards personalisation.

Overcoming the key barriers to the take-up of subscription services requires the delivery of a highly convenient and flexible service.

This might include unique products, a curated selection or just the element of surprise.

Delivering a convenient experience from start to finish is also key.

Letterbox delivery is highly sought after and brands, such as Garcon wines with its pioneering, flat wine bottle,  are seeking innovative ways to respond to this need.

The final piece of the jigsaw lies in delivering a unique selling point; something new, different or surprising, which helps the brand stand out.

Asher Budwig, Lola’s Cupcakes MD says: “Excitement on the un-wrap, something delicious inside, with a continued stream of innovation are all key success factors in the subscription box market for Lola’s Cupcakes.

“Our latest innovation, brownie boxes through the post, is an exciting new chapter for our company.”

Joseph Robinson, consulting director at GlobalData, adds: “Spurred on by the growth of mobile devices, the subscription retail segment has moved on from a past focus on magazines and newspapers, to embrace everything from recipe food kits, to shaving gear and self-care.”

Royal Mail commented: “Businesses across the UK understand the significant growth opportunities that subscription services can deliver. Future success will hinge on overcoming the key barriers to the take-up of subscription services whilst keeping subscribers engaged.

“With the UK’s biggest by far “Feet on the Street” network covering 90.000 postmen and women, Royal Mail is playing a key role in keeping carbon emissions low. The vast majority of subscription items are letter-boxable and so are ideally suited for on-foot delivery.”



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