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Online Vs Bricks: The Rise of Subscription

Razors, pet food and groceries straight to your door.

Commerce on the high street and online is in a constant state of flux. Brick-and-mortar stores are struggling with less footfall, higher overheads and the pressures of eCommerce rivals undercutting them and providing a better experience. Traditional retail stores are shutting and conversely, digitally native brands are opening up physical stores, albeit smartly, in the form of pop up shops and stores within stores. Brand loyalty certainly isn’t dead but it is becoming increasingly difficult to retain customers in this age of information where they can access businesses worldwide. Customers make comparisons and shop accordingly, often choosing value or variety over loyalty.

 

From humble beginnings.

The earliest successful subscription services were in the newspaper and periodicals industry. So, while they are not new, they are certainly enjoying a surge in popularity with brands such as Birchbox, Dollar Shave Club and Hello Fresh revelling in their success. A report commissioned by YouGov in 2018 suggests –

82% of Brits subscribe to at least one (subscription) service.

Instead of traditional transaction models, the subscription model generates recurring revenue that can be relied upon as a source of constant income. In 1999, Netflix offered a DVD rental subscription service with no late fees as per Blockbuster and other movie retailers, this gradually turned into the online subscription streaming service that is so successful today. They are a fine example of an evolving offering, keeping up with advances in technology and changing consumer needs.  Customers are time poor and like the groundwork and the worry being done for them. While not all concepts take off, take a moment to bow your head for the doomed Dash button, McKinsey states –

The subscription e-commerce market has grown by more than 100 percent a year over the past five years.

Three main groups of subscribers.

Those who subscribe to replenish – to save time and money (Amazon subscribe and save). Those who subscribe to curate – to be surprised and delighted by product variety (Birchbox). Those who subscribe for exclusive access (JustFab).

All are motivated by slightly different things. Two common triggers when initiating subscriptions are the product or service being recommended by someone or being money saving. Saving time, money and headspace is very important, the same YouGov study says –

89% of 16-34 year-olds say that subscriptions make life more enjoyable.

 

Subscription models and you.

Try looking beyond the product or service that you’re selling. What does it offer? What problem does it solve?

What does food in a box solve? It negates the need for headspace to think about what to eat that night, it solves the problem of trying to plan and execute a balanced meal.

A subscription service gives you scope to show how you curate, to illustrate your awareness of the industry, and the space to suggest other products that the customer should be trying. In subscribing to niche products, a customer is seeking a sense of belonging and joining a community of people who like the same things as they do, capitalise on that.

What you do beyond your product, how you look after and delight your customer from start to end is the difference between being distinctly average and excelling. Your eCommerce site can’t be simply 2D in its offering. It needs to give the depth of experience someone would have walking into a real shop but without the faff.

So, for now, brick-and-mortar stores are on the way out in favour of eCommerce and subscription models. But, with the youth of today again wearing sliders with socks and bum bags in a non-ironic way, who knows when their time will come back around again.

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