In 2013, Olivia Canlas saw subscription boxes for dog owners, wine connoisseurs, book lovers and various others, but none for cat owners. As the owner of two cats herself, she felt she was the right person to bring that idea to life.
Today, eight years after Canlas founded Meowbox, the world is a very different place, and subscriptions are hotter than ever. PYMNTS research, conducted in collaboration with sticky.io, finds that 61 million consumers across the U.S. are using at least one retail subscription service, with an average of 3.7. That means that at any given time, there are roughly 225 million active retail subscriptions in the U.S., 99 million more than there were in the first quarter of 2021.
“It’s not just the convenience of it being shipped to home. That’s just one factor,” Canlas, who is currently CEO of Meowbox, told Karen Webster in a recent PYMNTS TV segment. “But it rings so true that there has to be a lot of love and attention being put to exactly what’s in the box, making it just what the customer is looking for.”
Art of Sucre CEO Emily Harpel said subscriptions open up “so many opportunities” for both businesses and consumers, but unlike Canlas, she didn’t initially envision subscriptions as part of her business. Rather, Harpel set out to “upgrade cotton candy”, and bring her new and improved take on an old product to weddings, birthday parties and other events. Then COVID-19 forced nearly everything to shut down, and Harpel was forced to transition to packaging her cotton candy creations.
“All of this world is very new to me, but it has gone incredibly well in a short amount of time,” Harpel said. “And I was just noticing a trend of a lot of repeat customers, and a subscription service just really seemed to align with our mission and what we were moving toward.”
Brian Bogosian, CEO of sticky.io, told Webster that in his view, some of the most successful retail subscriptions come from “passion around a business segment and creating excellence and an experience around a specific product set.”
“What appeals to consumers is they have this artisan sense of the products that they’re purchasing and a passion of the founders and the people that work in these companies to provide an experience that they’ve never had before,” Bogosian said, adding that he believes the subscription market is “limitless.”
“There’s just so many different areas that can address a consumer opportunity and extend that customer lifetime value by providing … all the kinds of things that consumers look for,” he said.
Personalization and Flexibility
Among those features is free shipping, which nearly all of the top-performing subscription merchants offer; plan options, which 90% of the top performers provide; and a pause feature, which approximately three-quarters of the top subscription retailers offer.
Both Canlas and Harpel said free shipping — or the appearance of free shipping by including it in the price of a subscription — was practically a no-brainer for their companies from the beginning. Even as Meowbox has grown, Canlas said, the answer has stayed the same.
“That’s something that’s a non-negotiable,” she said. “Customers definitely appreciate seeing that shipping is free.”
What it all comes down to, Bogosian said, is making sure the customer has flexibility through an ability to pause their subscription, swap out products, easy-to-use management functions and other features. “It is the platform and the way you treat those consumers and how you address their needs, wants and desires by the organization that you built,” he said, adding that collecting and using customer data to personalize the experience is also very important and sets direct-to-consumer (D2C) subscriptions apart from the brick-and-mortar experience.
“There are lots of things that can be done because consumers do appeal to that, especially things where they feel like they’re getting value by being a member and being a subscriber,” Bogosian said. For example, he said, subscription retailers can look to adjacent products that customers may be interested in receiving, such as other desserts in addition to cotton candy or toys for dogs if research shows that a lot of cat owners also have a canine.
And as subscription businesses continue to grow, Bogosian said entrepreneurs such as Harpel and Canlas also need to look beyond just their product and find ways to reduce costs and become more efficient.
“There’s a lot of things that can be done to tune a business that’s beginning to scale to allow you the maximum resources to be able to invest as you want to expand that business,” Bogosian said. For example, he added, credit card processing fees or card approval rates on auto-renewing subscriptions may be too high, and even 50 basis points of savings “can mean a lot to a business like this that’s in the investment stage.”
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