From meal kits to wardrobe upgrades, new entrants in the increasingly crowded subscription commerce space keep emerging. Just this week, auto-replenishment company Harry's launched a women's line of hair removal products called Flamingo.
According to a McKinsey study released in February, subscription commerce retailers grew sales from $57.0 million in 2011 to over $2.6 billion in 2016. Established companies, including big-box stores, supermarkets and consumer packaged goods (CPG) conglomerates, have gotten on board for a piece of the action. To wit, in 2016, Unilever bought Dollar Shave Club for $1 billion, and last year Albertsons acquired meal-kit brand Plated for over $200 million.
But how do consumers feel about them?
At the beginning of the year, Salsify asked US digital shoppers where they planned to do more shopping in 2018. Subscription services were cited by only 8%, though still ahead of using social media and voice-activated assistants and smart speakers.
McKinsey identified three types of subscription services: replenishment, curation and access—all attracting users for different reasons. A financial incentive was most persuasive in signing up for automated delivery of diapers or cat food. Trusted recommendations or the desire to try something new drove interest in something like a beauty box. And all three of those criteria contributed to trying a members-only clothing and shoes site like JustFab.
Users cancelled replenishment subscriptions primarily due to product quality and wanting to buy when they felt like it, while curation and access subscriptions were dropped most because of poor value.