2020 was a massive year for subscription box sales. As the shutters went down on retail stores, the pandemic created a surge in home deliveries. And with many consumers happy to sign up for purchases on a monthly basis, it’s easy to see why more brands than ever explored subscription services.
But while subscription boxes have created new continuous revenue opportunities for brands, the market is incredibly competitive. To secure brand loyalty, companies need to optimize every aspect of the customer experience – from first touch of the packaging, to getting the most from subscription products.
A third of consumers have signed up to subscription boxes
As a society, we’ve become fully acclimatised to subscription culture over the past decade. Instead of going to the local movie rental store, we load Netflix; rather than buying CDs, we stream Spotify. We’ve even exchanged takeaways and supermarket trolley dashes for Hello Fresh and Gousto.
In the FMCG market, there have been a few pioneers of the subscription model – Dollar Shave Club has been going 2011, while Bliss/Soap & Glory/FitFlop entrepreneur Marcia Kilgore founded Beauty Pie in 2016. However, it wasn’t until the pandemic that retail subscriptions really took flight.
With non-essential stores closed and supermarket shelves stripped bare, global consumers went crazy for home subscription services. In the UK alone, locked down households spent nearly £1.4 billion on subscription boxes in 2020, increasing market size by 135% since 2017, Royal Mail research has revealed.
Now, almost a third of all shoppers are signed up to at least one subscription, and three quarters of these consumers subscribe to products from more than one brand.
So, who are the big winners of the subscription box revolution so far? Here are some highlights:
- Pact Coffee added 20,000 new subscribers during 2020, having taken several years to amass an audience of 40,000 customers. Its revenue increased by 50% as a result.
- Personalised makeup brand Ipsy grew memberships by 60% during the first wave of the pandemic, tripling revenue compared to the two months before Covid-19 hit. It has since bought out rival brand, BoxyCharm Inc. to form merged company BFA Industries.
- Heinz launched Heinz to Home during quarantine, offering bundles of its most popular products including baked beans, soups and sauces (including a vegan sauce bundle).
- Mindful Chef recipe box sales increased by 452% during the first UK lockdown.
- Haircare subscription service Function of Beauty secured $100 million net sales in 2020 and is on course to beat this figure in 2021. The brand has now expanded into retail, launching build your own haircare bundles, available at Target.
- Even Coca-Cola is now testing the subscription box market, offering merchandise and products not yet widely available in the market.
A strong strategy for capturing long-term customer spend
It’s easy to see why subscription services hold such appeal for brands. Customer retention is key to long-term success – and the average subscription box holder spends £60 per year. More in the case of premium products.
Unlike traditional retail purchases, which rely on consumers finding and buying items themselves, the hard work is done by brands creating the subscription boxes. They encourage people to explore new products, diversifying customer baskets and upping their spend. And even if customers aren’t overwhelmed by their first encounter, it takes effort to cancel subscriptions. As a result, many continue receiving items month after month, because they never get around to cancelling their membership.
But with so many consumers embracing the subscription economy, the market is becoming saturated. Brands that once used monthly home deliveries as their USP are having to go head-to-head with both established companies moving into subscription services, and new entrants in this space.
Given the high level of competition, subscription success cannot be taken for granted. To drive long-term loyalty, brands need more than excellent products; they need a complete consumer experience from the moment someone takes possession of their box.
Great subscription box experiences begin with impactful packaging
When the box itself is part of the service, it’s critical that brands nail their packaging design and content – using it to build relationships with the customer and communicate their company values. A plain box is a blank canvas on which to be creative and build brand equity. For example:
- Bookie Monsters Club uses whimsical drawings and wording on the front of its packaging to capture the attention and imagination of children. There aren’t many brands that can get away with claiming ‘a book a week keeps the mind on fleek’ without trying too hard to be trendy, but for this children’s book subscription service, it’s a perfectly pitched turn of phrase.
- Brew Tea Co uses fun, conversational language to establish a rapport with members and make the act of tea drinking a special event. The front of the subscription box declares ‘you’re about to have a cracking day’, while the bags in which the loose leaf tea is held are closed with a sticker declaring ‘make tea awesome’.
- The Cocktail Man doesn’t just rely on the front of pack labelling to build brand identity; it uses the cocktail mixing instructions, bottles of own-branded of ‘sliquer’ (pre-mixed syrup), and a complimentary garnish contained within the subscription box to augment its art-deco identity. It even includes a postcard of where the recipient might drink their cocktail (e.g. a view over Florence for its Negroni) to create a sense of atmosphere. This ensures The Cocktail Man is front-and-centre of the unboxing experience, rather than the branded spirit included in the package.
- Smol uses cardboard packaging to re-think eco-friendly cleaning product safety, including instructions on the back of the packet for how to work its innovative child lock system. It also promotes its industry certifications on the front of pack labelling, including the fact its packaging is fully recyclable.
While all these brands take a unique approach to design and wording, they have one thing in common: they recognise the role of packaging in nurturing and strengthening customer relationships. The power of the subscription model to turn the convenience of receiving monthly refills, reorders and replacements into a memorable moment.
As we emerge from the pandemic, old habits die hard for some consumers and we’re seeing many shoppers returning to stores. To avoid them hitting cancel on their subscription boxes, brands need to continue the momentum they established during lockdown – using packaging to create anticipation and excitement, transforming regular deliveries into a consumer-grade experience that drives long-term loyalty and spend.
For more guidance on optimising and localising your subscription box packaging, follow Hooley Brown on LinkedIn.
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