In a new state of the industry report by PipeCandy in collaboration with Rodeo about direct-to-consumer subscriptions, there was a surge in the market during the pandemic-induced e-commerce boom. As a result, there are a total of 225 million subscriptions in the U.S. from 61 million consumers — which is 3.7 subscriptions per person.
While the total annual revenue of the d-to-c subscription market is now $27.6 billion, it had more humble roots.
“The earliest known subscription box service appeared in 2004,” the report said. “Named ‘The Sampler,’ this service offered a collection of samples from ‘indie crafters, record labels and zines mailed to members for a fee of $10 per month. Similar attempts with subscriptions to wine clubs, and books were happening, but not a lot of stories are known from this era. The launch of Birchbox in 2010 put subscription boxes on the map.”
The report revealed that between 2010 and 2012, similar companies emerged, which included Ipsy, Blue Apron and Dollar Shave Club. And from 2011 to 2015, d-to-c subscription companies experienced a 4,461 percent increase in revenue. “During the same period, venture capital investment into such companies increased by 1,900 percent hitting a peak in 2015, subscription box directories emerged to keep track of all the new services, and e-commerce platforms such as Cratejoy and Subbly, designed specifically for the needs of subscription box businesses, were created.”
The report also analyzed the current composition of d-to-c subscriptions in the market and classified it into three segments. Thirty-two percent are replenishment services, which include grocery, grooming, toiletries and pet supplies. Companies that offer replenishment services include Dollar Shave Club, Quip and Olipop.
Thirteen percent of the market are membership subscriptions, which include a subscription to a product plus access to membership perks. Brands in this space include Thrive Market, NatureBox, Peloton, Amazon’s subscribe-and-save, and Costco.
Curation-type subscriptions take the lion’s share at 55 percent and include curated monthly boxes of apparel, accessories, snacks and cosmetics. Companies in this segment include Stitch Fix, FabFitFun, Birchbox and Cratejoy.
The 38-page report also analyzes the triggers for consumers to subscribe, continue the subscription, and then unsubscribe. The triggers for subscribing and continuing to subscribe include financial incentives, personalized experience, and “surprise and delight,” among other factors. Triggers for cancellations include a preference for buying the product on a need basis, finding a better subscription, and dissatisfaction of the product or service.
“D-to-c subscription brands need to carefully consider these triggers at different stages of the user journey and ensure they deploy a sophisticated technology stack that enables the delivery of contextualized experiences for acquisition, cross-sell, upsell and churn prevention,” the report stated.