Whilst subscription services are nothing new, having been a staple of the magazine and newspaper business model for decades, they are becoming an important and growing income stream for an ever-widening range of products and services.
Recent Government-supported research shows that almost almost nine in ten people across the UK now have at least one subscription service and that spending on these services increased three-fold three times in 2017.
Utility and entertainment providers such as Netflix and Amazon Prime are leading the way, but it is worth noting that more than 2.9 million UK consumers have also signed up to on-line retail subscriptions and that 25% of UK adults report that they expect to sign up to more subscription services over the next 5 years.
No wonder that some commentators refer to the boom in subscription services as nothing short of revolutionising the route to customers. This is graphically illustrated by Spotify, the Swedish music subscription service. In 2008, when Spotify was launched, consumers were accessing music free of charge via the internet causing very real challenges to the music industry. In just 10 years, Spotify has rejuvenated the sector. There are now over 10 million Premium Spotify subscribers and 70 million active registered users around the world.
There are three key types of subscription service, all of which have the potential to offer both the consumer and the provider with compelling benefits and which can be combined to great effect.
The replenishment subscription enables consumers to repeat purchase items that are required on a regular basis without having to place numerous orders or to shop around. Its key benefits are time-saving and convenience. This type of subscription works well for low cost recurring orders of commodities such as coffee, alcohol and vitamins.
Healthspan, which supplies vitamins and health supplements, provides a replenishment service to subscribers who automatically receive new supplies of their chosen vitamins and supplements through the post, ensuring that they never run out.
The Curation Service offers the excitement of surprise and delight to subscribers who receive a curated collect of items enabling them to experience new and niche products. This model has the benefit of allowing providers to gather data on subscribers and to customise their offering to better match the individual subscriber over time. This type of subscription works well for food, beverage and beauty products, especially given that subscribers are known to spend more on products after receiving samples in curated subscription boxes.
The Exclusive Access Service gives members privileged access to products and services not readily available to other consumers. A great example of this is a recent premium limited-edition collection from NARS which was sold out within 27 minutes of being announced online.
Alison Braham, our Retail Insights Manager has undertaken some detailed research into subscription services within the beauty sector. Her findings are fascinating. If you’d like to know more, please contact her directly by emailing her at alison.barham@willson-brown.com
