Why Are Subscription Boxes So Popular?

Subscription services have become a norm over the past decade or so, with entities like Netflix, Hulu, and other streaming services becoming many people’s primary source for TV. They aren’t the only subscription services that are becoming the norm, though. Whether it’s coffee as a gift or a subscription to a fashion service, the subscription box has dramatically risen in popularity in the past few years, particularly amongst millennials. From 2014 to 2016, the monthly subscription box industry saw an astounding 890% growth, although this rate slowed soon after. In 2017, the market was up just 10% from the previous year. Still, this means the industry continues to grow in popularity, even if growth has somewhat plateaued. The reasons for the surge in subscription box popularity may offer some hints toward the market’s future.

Novelty

 

One reason people enjoy subscription boxes may be because they are still relatively new. People in general enjoy feeling like they’re a part of something only a select few are privy to. On a similar note, the “surprise” of receiving a box each month is a thrill to many subscribers, some of whom claim the experience is like “a monthly birthday.” Boxes can introduce people to new brands and products they might come to love that they wouldn’t have discovered on their own.

 

Novelty can be a double edged sword, however, as it tends to wear off quickly. This may be a huge factor in why the market hasn’t continued to see exponential growth after being around for a few years.

Personalization

 

The customization options for subscription boxes are undoubtedly a great factor explaining their popularity. With more stores and brands getting in on the act, consumers have more convenient choices on their hands. Subscription boxes also have an advantage of “appealing to the brand agnostic.” This basically means that a large percentage of shoppers aren’t necessarily loyal to one specific brand, and many subscription boxes offer a collection of products from different brands to try. This allows subscribers to experience new products tailored to their interests.

 

Specific needs

 

A person’s location can play a large role in whether they consider a subscription service, and in some cases, subscription boxes are able to fulfill specific needs. For example, there are subscription boxes for children with special needs that can help them learn and express themselves. Subscription boxes are also a great option for those who live in out of the way areas, like Middle America, to conveniently get items they otherwise wouldn’t have the opportunity to. Subscribers to health foods boxes often site their great driving distance to a health foods store as a motivation for their subscription.

 

The majority of these boxes also have greater value than purchasing the included items individually. For those who find niche products that hold their interest, a subscription box is simply the best possible value.

 

The future

 

While the subscription box industry offers some great options for customers, the future of the industry is uncertain. Nearly 70% of all subscription box services are based out of the US. This means that, when viewed on a global scale, subscription boxes will likely always be a niche market compared to e-commerce as a whole. There have also been fewer new subscription box companies launched per year after 2015.

 

Despite the slowed growth in the subscription box model, investors still seem interested in keeping their options open. While investments in many of these companies have decreased in amount, the bare number of investments hasn’t changed much. This could provide interesting opportunities for leadership fluctuation, since previously leading subscription sites are receiving fewer visitors than in earlier years. While food and pet needs once dominated the subscription box service, beauty and apparel are steadily rising.

 

While the initially rapid growth of the subscription box service was never going to be sustainable, we may soon see new categories or companies rising up to dominate the market.

 

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