Is the once-hot subscription box model cooling down, or just slowing due to oversaturation?
One of the pioneering subscription commerce companies, Birchbox, has had trouble finding a buyer since last summer. The retailer was in talks with Walmart and more recently QVC, but ultimately ended up with Viking Global Investors—already an investor—buying a majority stake.
Consumers' likelihood of trying a subscription service is tied to age, according to "The eMarketer Ecommerce Insights Report," conducted in April 2018 by Bizrate Insights. Less than 10% of US internet users had received a subscription box in the past month, but one-fourth of those ages 18 to 29 had. For respondents 30 to 49, the figure was in the teens.
Birchbox’s core business is centered around a monthly $10 box containing a handful of beauty product samples, which can later be bought in full sizes. In 2017, 35% of the company’s revenues came from sales of full-size items.
The concept was unique, but the brands are not. Shoppers can just as easily purchase a full-size lipstick or shampoo at Ulta Beauty or Sephora. And now there is competition from Sephora’s own beauty box, as well as rivals like Glossybox and ipsy.
Meanwhile, meal-kit delivery service Blue Apron reported Q1 earnings on Thursday, and though the company experienced year-over-year decreases in revenues and customer numbers, both metrics rose by 5% on a sequential basis over Q4 2017. The year-over-year declines reflect the company's widely reported decision to reduce marketing spending, which has led to reduced customer acquisition.