Despite ups and downs in the subscription commerce segment, it's still a subject of great interest in the retail industry. It's also evolving from the 1.0 version that had its heyday from 2012 to 2017.
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.
Most brands that started online and direct to consumer (DTC) have expanded to retail channels, either through partnerships or acquisitions. And not just brick-and-mortar retail. Case in point: yesterday Blue Apron announced it would be selling meal kits in the NYC area on Jet.com as part of its three-hour delivery service.
That's thanks, in large part, to consumer interest. An August 2018 survey from GPShopper asked internet users in the US how they feel about subscription boxes, and nearly a quarter said they liked the ability to sample products without actually purchasing them separately. Very few US internet users said they discovered a new favorite brand (8%) or became a repeat customer (7%) because of a subscription box.
At this year's Groceryshop, the industry event focused on consumer packaged goods (CPG) and groceries, brands took to the stage to talk about their own subscription commerce efforts. Here are three examples that came out:
The meal kit company founded in 2012 went the acquisition route and was bought by Albertsons in 2017. Josh Hix, co-founder and CEO of Plated, acknowledged one of the biggest problems in this space: retention. He found that by month 23, only one in four customers stuck with the service because it "works really, really well for a certain customer," i.e., those with fixed routines.
The other 75% want something different. Many consumers aren't planners and don't know what they want for dinner until the last minute. "That's not a use case ecommerce is going to solve anytime soon," Hix said.
With Albertsons, the company can now provide meal kits on a nonsubscription basis and also gained access to "a treasure trove" of data to develop recipes and products based on customer feedback. Plated has been expanding into more meal occasions like breakfast and paying attention to ingredient origins and sourcing.