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How the Subscription Box Economy Exploded in Popularity Featured

shoppersWithin the last decade, the subscription box market has taken off. Everything from groceries to makeup products are being shipped around the world to those who subscribe to these trending vendors. Between 2014 and 2018 alone, subscription box services grew by 890%. Just what sparked that extreme growth? Amir Elaguizy, a co-founder of global subscription box marketplace Cratejoy, discusses three key trends that popularized the services:

  1. E-Commerce is Interconnected to Subscription Box Services
  2. Social Media Makes Niche Interests Accessible
  3. Users are Confident in Their Long-Term Value

The culmination of these market trends continues to contribute to the enthusiasm surrounding subscription box services. This article will examine how each bolsters their popularity.

E-Commerce and Subscription Box Services are Interconnected

The subscription box economy is intertwined with the booming e-commerce industry. When the e-commerce industry grows, so does the subscription box economy.

Largely popularized by large marketplaces like Amazon and eBay, the e-commerce industry grows significantly each year because of the convenience it offers users. In fact, global e-commerce retail sales are anticipated to hit $4.9 trillion by 2021.

In her discussion of the explosive popularity of subscription boxes, Elaguizy makes note of this. “[E-commerce has] shifted. ... it used to just be you’re a subscription box or you’re an e-commerce company,” she says. “Now, it’s just all direct-to-consumer e-commerce. Sometimes they have subscriptions, and sometimes they don’t.”

In short, the differentiation between subscription services and one-time e-commerce purchases is fading.

Subscribers are used to the e-commerce shopping experience. Because of its prevalence, they’re less likely to consider the differences between buying something on Amazon, for example, and purchasing a subscription box.

Consumers are more comfortable making purchases online than ever before. This presents a unique opportunity for subscription box service providers to appeal to a large audience. Those that employ a similar user experience to popular e-commerce sites will reap the benefits of the e-commerce industry. 

The exceedingly close relationship between e-commerce and subscription box services provides a foundational explanation for the subscription box’  growth in popularity.

Social Media Makes Niche Interests More User-Accessible

Social media has the power to unify and showcase niche interest groups, making it easier for users to find subscription boxes that cater to their interests.

Social media groups and company profiles allow people with specific interests to digitally gather by collectively following certain profiles or hashtags. Locating these audiences makes it easier for businesses to generate and convert leads—especially those selling a niche subscription box.

Consider subscription box services like The Nick Box, which sells boxed merchandise relating to Nickolodeon television shows. For the fall 2019 season, it’s sold out.

Source: The Nick Box

While the service offers colorful, unique, and nostalgic Nickolodeon products that remain popular with customers, it’s unlikely that users would be able to connect with this service without some guidance. Then, how did a box filled with Clarissa Explains it All products sell out so easily? 

That’s where social media comes in. Fans of niche topics, such as Nickelodeon TV shows, can leverage social media platforms like Instagram to create a community around both the topic and the respective subscription box.

The post above uses hashtags and profile tagging to open a dialogue for fans about niche common interests (in this case, Hey, Arnold!). This has the power to strengthen scattered fanbases, making it easier for vendors like The Nick Box to appeal to large volumes of interested customers.

Additional social media platforms also allow for this sort of community building, such as the Facebook group function and Reddit’s many subreddit pages. Subscription box services have also utilized these avenues to appeal directly to the right audiences.

Social media is key in bringing customers to subscription box vendors by appealing to audiences with common interests.

Users are Confident in the Boxes’ Long-Term Value

People are more comfortable with investing in recurring payments for their implied long-term value.

According to Clutch research, the majority of online shoppers are a member of at least one subscription box service.

The most popular boxes include IPSY’s monthly Glab Bag, Dollar Shave Club, Blue Apron. Users appreciate them for their curated, personalized services that are delivered to customers in a simplistic, low-stress way.

Subscription box services achieve their success not just by winning new customers, but by retaining the ones they have.

Subscription services of all types rely on customers sticking with the products after the first few months. They’ll lose money otherwise because they’re often investing more money in acquiring customers than the cost of the initial boxes.

Doing so creates value for users, though. This sense of long-term value is beneficial to both the customer and the company. Customers, now comfortable with online purchases, are more prone to realizing the long-term value being offered.

“Even something as simple as Netflix helped make consumers comfortable with the idea that I’m putting my credit card on a website, and I’m going to receive ongoing value from that transaction,” Elaguizy said.

Because bigger companies have been successful in offering consistent value for years on end, consumers are more open and ready to invest in subscription boxes that pledge  to provide long-term value.

Subscription Box Services Leverage Existing Trends to Succeed

Subscription box providers didn’t create a massive industry on their own. They noticed existing trends and leveraged them. For instance, they connected themselves to the already-thriving e-commerce industry to appeal to those searching for a convenient experience.

In that effort, they were able to associate themselves with long-term value in connecting themselves to other subscription services. Lastly, they were able to correctly source their niche audiences on social media, allowing them to quickly grow enthusiastic groups of customers around their offerings.

Sydney Wess is a Content & Editorial Associate for Clutch, the most extensive database of B2B companies and client reviews. Clutch helps businesses identify, compare, and shortlist the top business services for their needs. 

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