Tips for Implementing a Subscription E-Commerce Program
There's been a huge rise in "subscription e-commerce" companies that aim to redefine shopping. Some claim to eliminate the need to shop for clothing or to visit the drug store. In any case, these services allow you to put customers’ purchases on auto-pilot. Specifically, three models are gaining ground:
- discovering new products;
- automating commodities; and
- demoing products.
Discovering New Products
The most popular model is discovering new products via boxes. For a monthly fee, a box of goodies from various brands, or a single brand, are shipped to the subscriber. The idea? Exposure to things you ordinarily wouldn't buy — at a low price.
A standout is Birchbox, which provides a monthly sampling of women's beauty products and now men's health products. Samples are sourced from numerous vendors, with each box providing the opportunity to repurchase. There's also NatureBox, which white labels its products offering "samplers" of natural snack foods.
Three competitive advantages make this model stand out:
- Huge margins: Birchbox has the mass audience to woo beauty companies to offer free samples. The margins allow Birchbox to keep costs low for consumers who happily stay subscribed.
- White-label products: NatureBox insulates itself from e-commerce giants like Amazon.com by exclusively using white-label products. The same goes for co-branded "exclusives" that pop up in themed BirchBoxes.
- Define a niche: Knowing your customers, and the competitive landscape, allows deeper penetration into a market by tailoring operations specifically around what that audience wants.
A more challenging area is the space of automating commodities. Here, brands reinvent basics (e.g., shaving products, underwear), providing consumers a price advantage or the convenience of never needing to run down to the corner store. Dollar Shave Club made a splash with its viral YouTube video. Manpacks, which promises men all the "basics" every month, is another recent entrant into the subscription commerce arena.