New research on increase of subscription based e-commerce services in the US

There are 2,000 subscription box services in the US, according to My Subscription Addiction. Large existing retailers are taking note of the industry’s growth, with Starbucks, adidas, Amazon and Macy’s are just a few that have decided to jump into the game.

These custom-made boxes contain anything from makeup and beauty supplies to healthy snacks, coffee and workout wear and arrive on a regular schedule. The e-commerce subscription box business is growing rapidly as more customers decide to try them.

Beauty products lead the way in this industry. Seven of the top 10 subscription box services are beauty-related and the top three most popular boxes overall are beauty brands Ipsy, Birchbox and Julep Maven. Even Walmart has launched a beauty box business.

The subscription craze is not new. Magazines, newspapers and local food delivery started it all. The first modern e-commerce subscription service, Birchbox, launched in 2010 and grew 179% in just 2½ years to 800,000 members. In comparison, it took Columbia Record Club a whopping 41 years to grow its business by 196%. Impressed by the industry’s potential, more businesses entered the subscription box market in 2011, catering to niches such as moms and babies, dogs and even narrower markets such as gold mining and survivalist gear.

So, who is most interested in these services? Typical subscription box website visitors are in their early forties and makes $78,436 a year. Nearly six out of 10 visitors are women. 8.6m Americans, 4.3% of the online population, visited subscription box websites during the 2015 holiday season.

While the industry is booming, it is not a sure-fire bet for success. Thirteen percent of e-commerce subscription services tracked by My Subscription Addiction have gone out of business. Heavy product discounting, the novelty of the find among customers and high packaging costs are just a few factors sinking some companies.

To stand out from the competition, e-commerce subscription services are creating boxes that not only address practical shipping needs, but that also contain embellishments such as fabric liners and bows that reflect the brand’s identity. As the complexity of the box increases, so do the manpower hours needed to assemble those boxes. Many subscription services are turning to packaging companies to automate and streamline the packaging process for them so they can focus on other priorities.

Picture: Shorr.com