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Benefits of subscription based model for the consumers

Posted byAbhinav Madan

Date: 22/11/16

In the last 5 years, subscription based model has gained a significant popularity. Also popular as ‘subcom’, in the subscription boxes model the customer agree to pay a fee, which is a subscription fee so that they can receive the products in a box, specifically for them. This could be every month, every fortnight or every week.
The field which was once colonised solely by beauty boxes has now grown into a booming industry, especially for food products and eatables. We see a lot of food-based start-ups, especially in India, joining this latest e-commerce bandwagon. These startups are tackling food delivery, providing a box of edibles to your doorstep for a subscription fee. While subscription-based e-commerce companies definitely aren’t new, they are still an emerging trend in the online food ordering space.

One of the early leaders in this space is British snack box company Graze. Launched in 2009, the phenomenal success of Graze had lead to a series of subscription based box start-ups.
Naturebox is another name in the list. It was one of the first boxes to feature all-natural snacks and treats suitable for a health-conscious lifestyle and has seen a great success since its launching in 2012.
So, what makes the subscription model work? Why are buyers signing up for multiple subscriptions services each month? Let’s take a look.
The model offers convenience to customers and saves on a lot of their time and effort. Key advantages of Subscription based model for consumers are:

  1. Convenience for the consumer: When a consumer subscribes for the box, they get the expediency of a regular supply of their favourite brand’s products.
  2. Flexibility: Consumer can change, pause, and cancel the subscription membership at any time.
  3. Generates added value: Subscriptions bring added value to the consumers through bundling or getting it all for the price of one.
  4. Personalized: The box you receive is personalised just for you. Depending on your past selections, your taste preferences; you enable the merchant to deliver the products that are best for you. Oh! Yes, you can notify the merchant any time if you would like to receive a particular set of product(s) in your next box.
  5. Great gifting option: One of the greatest appeals of subscription box services is that they make fantastic gifts. Show your love by stretching out your partner’s birthday gifts over a year, or make the life of a best friend who has just relocated to a new place a little easier with a wonderful snack box each week. Yes, you can enter custom gift messages and can choose a captivating gift wrapping option.
  6. Discount entry points: A lot of e-commerce merchants offer discount entry points to lure and reassure users. E.g. ‘first month free’, a cheaper first month, ‘money back’ trials etc. are very common.
  7. The element of surprise:In instances where the customers have not specifically mentioned their preferences, the merchant curates the products as per the customer purchase history and curates a surprise box. The surprise subscription creates a sense of mystery and increases the excitement to receive each package.

Subscription box industry is viewing a rapid growth with a lot of subscription based services coming in, catering to everyone from organic food to snacks to pet owners.

Rapid growth in the subscription based model industry
Interest in subscription based model over time, Google trends

 

A new consumer insights retail report found that visits to top subscription box sites have exploded by nearly 3,000 percent in the United States over the past three years.

Total monthly visitors to subscription based model in US subscription industry
Consumer insights retail report: US subscription based industry

 

Online shoppers are divided into 3 major categories:
• People who are looking for an attractive deal
• People who are affluent and have scarcity of time
• People looking for convenience and ease of commerce
The subscription model is beneficial for all three segments but the later two appreciate this model more as they have the convenience to order once and get a periodic service/product. This convenience has been replicated in products like Gogrub and Firsteat. Moving with the trend people will be relying on a subscription to even order their grocery and daily needs as it will be highly convenient for them. By 2020, subscription models will have a great impact on the online market.

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