“What is a Subscription Box?”
A subscription box is a recurring, physical delivery of niche-oriented products packaged as an experience and designed to offer additional value on top of the actual retail products contained in a box.
How do you define a Subscription Box?
This is a question I get asked quite frequently, and the answer is one that I’ve debated with friends and colleagues for years. Many people (especially consumers) simply see subscription boxes as “a monthly delivery of cool stuff I like in a box”. We weren’t even sure exactly what the term meant when we launched SubscriptionBoxes.com in 2011 and at the time only about 50 ‘boxes’ actually existed.
There’s no official definition for this term. Even Wikipedia’s entry for ‘Subscription boxes‘ makes a vague and overgeneralized attempt at defining what a subscription box is, crudely defining them as “a package of retail products sent directly to a customer on a recurring basis.”
The difficulty of defining what a subscription box is and isn’t stems from the fact that there’s so many different spins on the general concept. It’s important to note that the term ‘Subscription Box’ does not imply a specific business model, but rather a consumer retail concept. This unfortunately makes it very difficult for industry analysts and research groups to come up with data of any real significance in regards to the ‘Subscription Box industry’ and its outlook.
While there are in fact many different types of subscription boxes with varying business models, value propositions, supply chain and marketing strategies, I do believe there are a few very important unifying traits that can be used to define a subscription box.
To be defined as a Subscription Box, the following must be true:
- Must be a physical delivery (digital subscriptions can’t be classified as a subscription box).
- Must be a recurring subscription/membership (of any term or frequency).
- Must feature one or more of the following value propositions:
- Surprise (at least 1 or more items in the box must be unknown to the customer before delivery).
- Discovery (slightly different than ‘Surprise’. Discovery-oriented subscriptions don’t have to have ‘mystery’ items, it’s more about consumers ‘discovering’ items they’ve never seen before).
- Curation (a thoughtfully picked variety of products related to a specific niche or category).
- Savings (a clear savings on the price paid for the box versus the total retail value of the items inside).
- Thoughtful Presentation (From custom packaging to the way products are arranged inside the box).
- Convenience (convenience cannot be implied solely by the fact that it’s a recurring ‘auto-delivery’. Rather, think of the fresh ingredient subscription boxes like Blue Apron or Green Chef–they deliver convenience in the form of pre-prepared ingredients and recipes).
These subscription box value propositions are defining characteristics
The satisfaction consumers get from a subscription box is often not directly associated with the actual products inside. It’s the culmination of the products, the experience and unique value propositions that make subscription boxes distinct from other consumer goods.
The subscription box value propositions I’ve outlined below in more detail are important because in addition to serving as defining characteristics they’re also the best tools a subscription box business owner can leverage to influence vital KPI’s, like retention and LTV. Many successful subscription boxes actually hit all 6 of these value propositions.
This is the characteristic of many subscription boxes that inspire phrases like “Checking the mail is fun again!” or “It’s like my birthday every month!”. This type of anticipation and excitement customers feel towards their upcoming box is an invaluable behavior – it’s often responsible for the wealth of unboxing and ‘box reveal’ videos, photos and blog posts.
Inspiring and leveraging this type of behavior is a good way for subscription box businesses to reduce their blended customer acquisition cost. Also, by making most of the items in a subscription box a surprise, you can release ‘teaser products/sneak peeks’ at key times of the month to stimulate anticipation and reduce churn of existing customers.
As I mentioned previously, a discovery-oriented subscription box doesn’t have to also be a ‘surprise’ subscription box, but they do often go hand in hand. This value proposition is most frequently used with subscription boxes in consumer industries that have lots of options and can be difficult to navigate (like the beauty or natural products industry). Consumers who buy into this value proposition are looking to find quality products they’ve never seen before. Discovery-oriented subscription boxes that fail to deliver on this value proposition may hear comments from customers like “I don’t want items I can buy at my local grocery store!”
Many subscription boxes also feature curation in some shape or form. This value proposition is essentially the promise that the items in the box won’t be totally random! This is the strongest value proposition for artisans, makers, and niche CPG brands to use when adding a subscription box to their product lines. Subscription boxes that use this value proposition will usually position themselves as an authority or expert in their category, promising to only deliver items that have been ‘hand selected’ or vetted by a knowledgeable team. While ‘curation’ seems like a similar value proposition to ‘discovery’, the difference is that the products in a ‘curated’ box are expected to go through a more critical and thorough examination.
I believe curation is a fundamental attribute to many successful subscription box businesses and it manifests in three distinctive ways: Customer influenced curation, thematic based curation and expert curation. Through customer influenced curation Birchbox allows you to influence their curation by filling out a beauty profile. Loot Crate’s curation starts with a strong theme (thematic based) and Bestowed Box promises that the healthy products they’ll send you have been hand-picked and tested by their team of experts (expert curation).
This is usually seen as an obnoxious value proposition to subscription box businesses, because even if they’ve totally nailed the other value propositions, the long term retention of a consumer seems to always come down to whether they feel they’re getting a good deal on the products in their box. It has also become a common habit of subscription box consumers to research the products received in their box in order to tally up and confirm the total retail value. This is also standard practice for subscription box review blogs.
This is one value proposition that almost all subscription boxes try to incorporate in some form or another. Thoughtful presentation is also probably the number one most unifying trait. Many subscription boxes feature beautiful retail quality packaging, custom inserts, stickers, tissue paper and more. Ultimately, it should be clear that an effort was made to make the box and the process of opening it a part of the experience rather than simply a means to get an item to a customer’s door.
This is a tricky one, because the value proposition of convenience is often associated with replenishment subscriptions (think Amazon Subscribe & Save or Dollar Shave Club). This is almost a common non-defining characteristic, but many subscription boxes offer convenience in a form other than simply ‘not forgetting to re-order something’. Crucially, the element of convenience comes down to how a subscription box service is pitched. Clearly, there is a difference between Amazon Subscribe & Save and Dollar Shave Club – one is simply a recurring delivery (Amazon) and the other is a subscription box (DSC). This boils down to their framing: Dollar Shave Club has other value propositions in this list: Savings, Discovery and Presentation. Instead of being a mass market consumer brand who enables deliveries of product, Dollar Shave Club has a branded, “shaving expert” persona built into it, making it similarly convenient but decisively unique to consumers.
Similarly, consider the “convenience” aspect of boxes like Bulu Box. While discovery is a value proposition here (finding new supplements), it’s also a convenient way to try & test new products before buying the items full size counterparts.
What really makes convenience a defining value proposition for subscription boxes comes down to the ease in which they solve problems for consumers.
Finally, checking the mail is fun again!
Consumers love subscription boxes for a reason, they’re unlike any other consumer good we’re used to receiving in the mail. The commonly heard phrase “Finally, checking the mail is fun again!” is most often associated with the rise in popularity of subscription boxes. While ecommerce and technology have certainly made shopping more convenient, it lacks a certain tangible element that consumers still really appreciate. Unlike individually fulfilled consumer product goods (think Amazon.com), Subscription boxes offer more of a physical, all-encompassing experience. The value propositions I’ve outlined above are what really make subscription boxes stand out (especially when 2 or more of them are utilized) and I believe you can define a subscription box using these same unique characteristics.