Previously a relatively niche industry, subscription box businesses have enjoyed steady growth in popularity over the past few years, particularly in the United States. And while many subscription box start-ups attempting to ride the wave of popularity turned out to be flashes-in-the-pan, others have turned into major global brands: Dollar Shave Club, Harry’s, HelloFresh, Birchbox.
Even in the UK, where subscription box services are less well-established than in the US, more than a quarter of consumers (27.4%) are currently signed up to a subscription service, according to a February 2019 report by Royal Mail Group, The UK Subscription Box Boom. At the time, the UK subscription box market was forecast to reach £1 billion in value by 2022, a 72% increase from its value in 2017.
As with every other part of retail, the coronavirus crisis has turned things on its head – but for subscription boxes, that could be very good news. With millions of people now stuck at home, many of whom are looking to try new things and entertain themselves or are unable to get regular access to certain products with ease, subscription boxes might be the perfect solution.
I spoke to three subscription box companies – Pasta Evangelists, a subscription box service for making “restaurant quality” pasta; Craftiosity, a craft subscription box; and Cratejoy, an ecommerce platform for subscription boxes – about the increase in demand that they’ve seen, why subscription boxes are playing such an important role in the current crisis, and what the lasting effects of the crisis might be on the subscription box industry.
A boost to subscription box businesses
Amir Elaguizy is the co-founder and CEO of Cratejoy, an ecommerce platform that curates and facilitates subscription box businesses. First founded in 2013, Cratejoy is home to a wide variety of different subscription box services – and almost all of them, right now, are seeing a big boost.
“I think every category has been affected differently,” he says, “but broadly, what we’ve seen is a pretty big increase in sales – led by certain categories. For instance, we’ve seen a 212% increase in kids and self-care. So, this is things that help with kids’ education, activities, things for adults to spend time together on, date nights, family games… We’ve also seen a big increase in working from home transitioning – boxes that keep families and friends connected, book boxes; people just looking for things to do around their house.
“Off the top of my head, I can’t think of any big ‘loser categories’; I know there have been categories that have suffered some, but broadly, we’ve seen such a large increase in e-retail in general that pretty much everyone we work with has been a big winner.” Along with individuals and families buying subscriptions for themselves, Elaguizy notes that Cratejoy has also seen an increase in gift subscriptions as people look for ways to connect with each other from a distance, and also in companies buying subscription boxes on behalf of their teams to ease them through the working from home transition.
Craftiosity, a UK craft subscription box aimed at adults that supplies a complete kit of tools and instructions to make a craft project with every box, has also seen a noticeable uplift during the pandemic – something which chimes with general ecommerce trends at the moment, as craft and hobbyist retailers have broadly benefited from the lockdown as people search for activities to do in their homes and look to try something new.
Moira Fuller, the founder of Craftiosity and a coach for creative business owners, reports that Craftiosity has seen a “significant increase” in sales since the pandemic, with a 70% increase in new subscribers and gift subscriptions compared to the company’s original projections. “We’ve also seen an increase in interest from third parties looking to market on our behalf, particularly discount websites,” she adds, “but a key consideration in our marketing choices has been ensuring our supply chain could cope with the increase in demand.”
Pasta Evangelists, meanwhile, has seen a sevenfold increase in its subscriber count since mid-March, as people who are suddenly cooking the majority of their meals at home look for an easy way to do so – and perhaps also to recreate a ‘restaurant experience’ in their homes. “Clearly as people are less able to get out and about and/or find supermarkets depleted we, and other subscription box services, are on hand to help by delivering direct to the customer’s door,” says Finn Lagun, Pasta Evangelists’ Head of Marketing. “This is particularly true for older people and those with underlying health conditions.”
The company has been feeling the weight of responsibility as a business that is delivering food to people when there is so much food uncertainty. “In some respects we feel, for the first time, a sense of duty rather than just commercial objectives. We’re trying to do our bit to #FeedTheNation,” says Lagun. This has involved adapting the company’s marketing messages so as to avoid seeming opportunistic – and to encourage responsible behaviour.
“We’ve wanted to avoid taking advantage of the situation – this was particularly true when people were stockpiling pasta. Although this could have been advantageous for our business, we sought to discourage it and asked our customers to think of others and consume responsibly,” says Lagun.
“Given we are in a privileged position, we have also sought to find ways to help – we’ve so far raised almost £20,000 for the charity Age UK, and have donated food to several hospitals.”
Marketing and advertising in an unprecedented time
With the world in the grip of a pandemic and the global economy taking a battering, all of the businesses I spoke to have had to rethink their usual approach to advertising, marketing and communications. Some advertising avenues have been cut off altogether, but new ones are also presenting themselves; subscription box businesses are currently walking a fine line between wanting to bring in new business and ensure their balance sheets remain healthy, while also striking the right note with consumers at an uncertain and fraught time.
Pasta Evangelists has been forced to put out-of-home advertising on hold, but has scaled up its digital channels, such as Facebook advertising, where it is currently seeing lower costs than usual. It is also looking to the summer with its marketing messaging, drawing on the company’s Italian roots. “As we approach summer and there is uncertainty around people’s holidays, we are trying to do what we can to help our customers ‘visit’ Italy, vicariously, through our brand,” says Lagun. “For example, giving tips on how to create an al fresco dining setting in their garden, giving customers a say on our new summer recipes, and so on.”
Craftiosity is also seeing a higher ROI from its Facebook advertising, but the biggest visibility boost has been from organic search. “Our biggest change has come from organic traffic – we already rank highly for ‘craft subscription box’ and saw a 240% increase in traffic in the past four weeks,” says Fuller.
“To our consumers, we’re communicating that we’re still open for business and posting as normal, with a top banner across our website, linking to a blog post on the safety measures in place and FAQs. We also created print materials to put into the boxes posted out to customers.
“Our normal sales pattern has also adapted – we make our boxes to order each month, with a fixed dispatch date, but are now also offering immediately available boxes (one of our past projects) for customers looking for faster delivery.”
Elaguizy reports that Cratejoy’s sellers – their subscription box businesses – as a whole are changing the way they think about customer acquisition, stepping up their digital marketing activities and taking advantage of historically low online advertising costs. “I think everybody is messaging about how they are being thoughtful about the crisis, whether it’s by carrying out social distancing with fulfilment, or how they’re a small business and this helps them survive – so I think there has been an adjustment in messaging.”
The importance of ‘surprise and delight’ in a pandemic
As for Cratejoy’s own marketing communications, it has been focused on helping buyers – subscription box subscribers – understand what subscription boxes can add to their life during this time, while also helping sellers solve any challenges that they might be facing with supply chains and fulfilment.
“I think the role that subscription boxes are playing right now is giving people something to look forward to – subscription boxes in general have always had a ‘surprise and delight’ role for customers, and I think now more than ever, people are looking for that delight,” he says. “I also think helping people take care of their health, and support small businesses – making them feel like they’re doing their part, while also getting what they need – is a big role that we’re playing.”
Craftiosity’s Moira Fuller echoes this: “The key difference between buying a subscription box and shopping with an online retailer is (or should be) one of curation and creating an experience when customers open their box. Alongside Craftiosity, I coach online retailers on how to add or pivot to a subscription box model, and this is a key discussion we often have – how you step up and serve your customers in a way that delights them each month, and create a model that supports your business with consistent, recurring income.
“When a customer opens a subscription box, there’s an element of theatre in that unboxing – uncovering the contents, learning about what’s inside, getting excited about using the components. Subscription boxes are also perfect as a small treat or to gift, with many boxes offering multi-kit gift options, or the ability to buy a single box.”
How will the coronavirus pandemic change subscription box retail?
Many retailers are looking to direct-to-consumer – some of them for the first time – as the best way to reach consumers in the current crisis. With traditional ways of doing business upended – brick-and-mortar retailers largely closed, restaurants and cafés shuttered and supermarkets under strain – a lot of companies have realised that finding and selling directly to their customer base could be their best hope of surviving. Launching a subscription box product is one way of doing that.
But does the renewed appetite for subscription boxes necessarily mean that this is a good time to break into the market? And will this short-term spike in interest translate into longer-term benefits for subscription box retailers even once normal life resumes?
Amir Elaguizy thinks so. “I think the digital appetite right now is extremely high. Consumers are looking at many months of being in their homes, and new, interesting, innovative offerings that help them connect with their friends and family, or stay engaged with their children, give them a better quality of life, these things are going to be welcomed – that’s what we’re seeing in the purchasing data.
“There’s huge numbers of new consumers who are getting exposed to what subscription boxes have to offer for the first time; I think those people are being delighted and they will stick around. There’s also a lot of purchasing that will go back – as it should – to restaurants and small businesses once things re-open, so I think it’s both going to spread awareness about subscription boxes, which is fantastic, and it’s also getting a temporary bump from spending that would normally be going towards local small businesses. But there’s a lot of trying and enjoying that I believe will stick around in the longer term.”
Moira Fuller adds, “We don’t know how long the lockdown will last, but particularly for those at higher risk, it could be some time before everyone’s able to move freely as they have in the past – and in that time, we’ll rely on the postal service.
“Longer term, I think this time will normalise subscription boxes as a way of shopping, in the same way online working is normalising the use of video meetings and online training. It’s the responsibility of those running the boxes to keep the contents fresh and interesting for consumers. A significant number of our subscribers have been with us for more than 20 projects, so this is something we always keep front of mind.”
Pasta Evangelists is braced for a drop in sales once consumers are able to go out again and make the most of the renewed freedom, but Lagun expects that there will always be a niche in the market that they can fill. “Short-term we may see a decline in the ‘relevance’ of subscription boxes as life returns to normal. We anticipate consumers will want to eat out and make the most of restaurants et cetera in a significant way. However, just as normalcy returns so too will things like time poverty, commutes, and so on, and these daily inconveniences are the things that help make subscription services relevant in the long term: i.e. we all have too little time!
“For Pasta Evangelists this is a tremendous opportunity, and we’re very mindful of how privileged we are to be in the probably 1% of business seeing an upside in the current circumstances. With some luck, and strong execution, we may be able to grow our business more quickly than expected in the long term.”
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