How the pandemic revived the subscription box industry
How the pandemic revived the subscription box industry
The subscription box craze isn’t new, but the COVID-19 pandemic has played a huge role in subscriptions experiencing a renaissance as many brick-and-mortar businesses struggled. Wicked Reports analyzed specific trends regarding subscription boxes and their broader economy to illustrate the impact of the pandemic on the industry.
Subscriptions have grown in popularity largely due to their convenience. Amid the US lockdowns that began in March 2020, many people have turned to online shopping so they can shop safely at home. Subscriptions were not limited to just food and household items. There were also strong gains in beauty products, personal care boxes and pet supplies. Streaming services have also seen a huge surge in subscriptions during the pandemic, topping 1 billion subscribers worldwide for the first time.
Subscription boxes are also called replenishment services and usually consist of several products, either selected by the customer or organized by the service itself (especially in the case of niche products). Items are shipped to customers on a regular schedule. Customers sign up for these services for a variety of reasons, including to get a trusted source of specific products they use regularly, such as fresh vegetables or groceries, or to try different items from their favorite brands, or to test products they haven’t tried. , which often come as “surprise items” in their box.
A July 2021 customer survey conducted by manufacturing company Jabil found that 79% of consumers expressed interest in automatic top-up services, following a growing trend that had already seen gains among consumers the previous year. . Basic household products such as food, personal care, and pet supplies were the biggest draws, and the results further revealed that the popularity of subscription box services is directly correlated with income level. and geographic residence, with urban centers having a higher trend of subscribers.
Subscription services have not always received such large gains. In 2010, when subscription box services began to take off with pioneering offerings from Birchbox and Blue Apron, companies struggled to retain subscribed customers. Consumers expected these services to save time and money and many found the subscription boxes to be expensive. As a result, companies that adopted the subscription service model early had to rethink their strategy and find other ways to attract customers.
Changing consumer perception and preference over the past decade has turned the tide on the popularity of subscription boxes. Keep reading to learn how the pandemic in particular has revived the subscription box industry.
Reliance on delivery has created a foundation for subscription services
Since the start of the pandemic, American consumers are buying groceries online more than ever. A recent breakdown by Statista revealed that Walmart, Amazon and food delivery service Instacart together accounted for more than 65% of all online food and drink sales in March 2021.
Grocery delivery and pickup at that time accounted for $7.1 billion in overall sales, a figure that declined slightly in subsequent months as parts of the country eased safety restrictions, but in October of last year, that market was still worth $6.4 billion. Subscription services allow businesses to benefit from recurring revenue while providing customers with predictable delivery services, allowing consumers to control their own product selection and delivery schedule.
For direct-to-consumer brands, the predictability of customer subscriptions has facilitated strategic business decision-making regarding methods to maximize month-to-month growth and build brand loyalty. For consumers, having a subscription allowed for regular replenishment of items on a monthly basis and helped consumers save time. And given the pandemic, many customers have preferred to stay home rather than having to physically go to a store.
Closures and fears of COVID-19 transmission have made e-commerce a necessity
At the start of the pandemic, when social distancing measures were strictly enforced, many people turned to e-commerce as an alternative to in-person shopping. It was also a way to regulate their expenses. The accelerated shift to online shopping during the pandemic has been an opportunity for businesses to increase their online revenue, but this shift in consumer buying behavior has also forced businesses to very quickly devise new approaches to their online strategies.
As a result, companies such as Amazon and Walmart, which hold the lion’s share of retail e-commerce dollars, along with other niche retailers such as home decor store Wayfair and pet supplies brand Chewy , began offering subscription box services. This strategy allowed consumers to shop safely and, in the case of curated boxes, mimicked the experience of physical shopping. Overall retail e-commerce revenue has clearly demonstrated the success of these pivots, reaching around $768 billion in 2021 (from $644 billion in 2020).
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Subscriptions offered something reliable to look forward to during a time of unpredictability
A 2022 study published in The Lancet found that cases of depression and depressive symptoms increased by 24.3% in 2021 compared to pre-pandemic levels. Isolation and concerns for self-care and well-being have blossomed as stay-at-home orders and blanket shutdowns cut people off from many essential aspects of life. In this regard, subscription box services have played an interesting and unexpected role.
The reliability and consistency of these services was such that people had something consistent to look forward to, something that also provided the things they needed to get by. Whether it was a favorite brand of sauce for dinner that night or a subscription box full of curated surprise products and products, consumers were able to offset the boredom and sense of isolation and create a sense of excitement in difficult times. Additionally, a resurgence of interest in crafts and personal projects propelled the growth of specialized craft boxes that served as a productive family activity to keep busy at home.
The pandemic has inspired an increased focus on self-care
As the reported cases of depression and high depressive symptoms clearly show, the COVID-19 pandemic has had a profound impact on people’s mental health. He also raised awareness of the importance of taking care of yourself.
With a majority of people spending more time at home, health and fitness have become a priority. A June 2021 survey found that 80% of Americans have become more focused on their health since the start of the pandemic, and 73% said their personal care had shown a noticeable improvement. As people began to see the value of “me time” and self-care in general as a necessity rather than a luxury, they also began to invest in services that meet those needs. The Beauty & Personal Care and Health & Wellness segments each saw around 20% growth in average order value among buyers between 2019 and 2020.
More than two-thirds of people now buy household basics through subscription services
Online shopping for household necessities — from groceries to pet food — has exploded during the pandemic, accelerating the growth of subscription services. A 2021 consumer survey shows that 68% of people used subscription services for basic household items such as food and drink, home care, and personal care.
At the height of the pandemic, consumers found subscription services reliable and convenient, especially with the shift to more meals on wheels. For companies looking for more stability in times of uncertainty, subscription services offered the opportunity to generate recurring revenue. Pet supply subscriptions have also increased, with nearly 80% of pet owners using subscription services for their purchases.
Additionally, one of the most telling statistics about consumers’ propensity to use subscription services is that survey respondents who indicated they don’t use them at all fell from 54% in 2020 to 32%. in 2021.
This story originally appeared on Wicked Reports
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