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Subscription boxes are piling up at doorsteps as consumers increasingly shop from home and avoid brick-and-mortar stores since the outbreak of COVID-19 earlier this year.
Over the past four months, many U.S. Consumers turned toward the direct-to-consumer subscription box market for the first time, with one in five people buying subscription boxes during this time frame to have products available to them during the pandemic, according to a new study from CouponFollow, an online hub for collecting coupon codes and promotions among major retailers.
CouponFollow surveyed more than 1,000 U.S. Consumers, and more than half (51%) said they bought subscription boxes to try new products, while another 39% said they simply enjoy receiving products in the mail. Approximately 37% of respondents found subscription boxes “easier than shopping.”
“For many American consumers taken by surprise by the pandemic, the subscription box industry brought a sense of comfort and convenience that was highly sought-after immediately following massive shutdowns across the country,” says Marc Mezzacca, founder and CEO at CouponFollow. “It’s the first time in a long time Americans felt massive supply-chain issues in many sectors, especially around essentials. There was a heightened sense of fear around access to products, and consumers looked to other ways to get the goods they desired.”
Meal kits as well as subscriptions for clothing and skin care led the pack. The most popular subscription services are HelloFresh (21%), BarkBox (20%), Blue Apron (19%), Dollar Shave Club (18%), Stitch Fix (12%), and Ipsy (12%), the last of which is a cosmetics-focused subscription service sending out makeup and skin care samples. Beauty shoppers were found to save the most money on subscriptions, at an average of $20 per month. But consumers spend more money on prepared meals and meal kits than any other service (at $74 per box on average).
“My sense is that most people appreciated being able to trust that whatever they need will be delivered to their doorstep during the pandemic,” Mezzacca says.
Subscription boxes saw an initial surge in popularity in the 2010s, led especially by the likes of beauty service Birchbox and grooming supplier Harry’s. Over the past several years, the market has exploded with direct-to-consumer monthly subscriptions for everything from snacks to books to liquor to cannabis products. Some of these services have become hallmark success stories, like Unilever’s $1 billion purchase of Dollar Shave Club in 2016. But other startups have become a dime a dozen.
Mezzacca warns that subscription models of any kind face the battle of keeping subscribers interested and engaged with a product offering, as well as differentiating from similar services. Approximately one in five people indicated they plan to cancel their subscriptions due to COVID-19-related financial hardships, with 30% and 26% saying technology and clothing services will be the first to get cut, respectively.
“This suggests that people may still be a bit more selective about the ‘little luxuries’ they’ll choose to purchase in the short term,” Mezzacca explains. “There seems to be trendy subscription services that pop up and last in parallel with a certain trend, but often fade in the long term. What we’ve seen with some of the most successful, popular, and longer lasting subscription services is meeting a core need (or want) that is shared by many and ensuring a focused and unique value proposition (for example, Dollar Shave Club).”
Although brick-and-mortar stores have reopened to shoppers in many regions, retailers cannot welcome as many customers at once as they could before the pandemic in order to adhere to social distancing guidance. And some shoppers just might not feel comfortable or safe going out right now at all as new cases of COVID-19 continue to surge. So there might be more life in the subscription base for a while. CouponFollow said one in three respondents admitted they’re paying for boxes they don’t really use or need, but they will continue subscribing to try out new products anyway.
“There’s no question that the subscription box model itself is here to stay, but if a subscription service is not conveying continued value to the subscriber, eventually those customers will cancel their subscriptions,” Mezzacca says.
