Table of Contents
Executive Summary
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- Top takeaways
- Market overview
- Impact of COVID-19 on eCommerce and subscription services
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- Figure 1: Short-, medium- and long-term impact of COVID-19 on ecommerce and subscription services, October 2020
- Opportunities and challenges
- Educate to dispel misperceptions
- Plan for cancellations
- Add more customization and flexibility
- Take more of an omnichannel approach
- Promote subscription services as gifts
The Market – Key Takeaways
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- eCommerce is winning in the pandemic
- Subscription services should continue to see growth amid and after the pandemic
- Subscribers in, subscribers out
- Subscription services for consumables most popular
- Opportunity to add more customization
- Online services can expand offline
Impact of COVID-19 on eCommerce and Subscription Services
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- Figure 2: Short-, medium- and long-term impact of COVID-19 on ecommerce and subscription services, October 2020
- Lockdown
- Re-emergence
- Recovery
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- Figure 3: Total US retail ecommerce sales and forecast, at current prices, 2015-25
- COVID-19: US context
- Learnings from the last recession
- Key metrics
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- Figure 4: Personal consumer expenditures, 2007-Q2 2020
- Takeaways
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Market Landscape
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- Impressive growth in a decade
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- Figure 5: Subscription service participation and interest – any service (net), July 2020
- Opportunity targets include 35-54 women, singles and low-income families
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- Figure 6: Subscription service participation and interest – any service (net), by select demographics, July 2020
- No strong preference for automatic replenishment versus online subscription boxes
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- Figure 7: Types of subscription services, July 2020
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- Figure 8: Frequency of receiving service, July 2020
- A very fluid membership cycle; cancellations common
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- Figure 9: Experience with subscription services, July 2020
Segment Performance
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- Consumables most popular subscription services
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- Figure 10: Subscription service participation and interest, by category, July 2020
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- Figure 11: Subscription service participation and interest – Nets, by category, July 2020
Market Factors
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- Economic and policy-related factors
- Driving preference and loyalty becomes increasingly important at a time when consumers are pulling back on spending
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- Figure 12: Consumer confidence and unemployment, January-September 2020
- Opportunity to grow penetration among Hispanic and Black populations; increased personalization is one viable approach
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- Figure 13: Household income distribution by race and Hispanic origin of householder, 2018
- Demographic factors
- Gen Zs and Millennials don’t readily offer their loyalty, but they will pay for services they really want and see value in
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- Figure 14: Population, by generation, 2014-24
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- Figure 15: Attitudes toward subscription services, by generation, July 2020
- Technology factors
- A rise in online shopping should naturally boost subscription services
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- Figure 16: Shopping distribution – online vs in-store – before and during COVID-19, July 2020
- Environmental factors
Market Opportunities
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- Give customers more control
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- Figure 17: Attitudes regarding customization of subscription services, by gender and age, July 2020
- Constantly test-pricing strategies
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- Figure 18: Attitudes regarding discounts for subscription services, July 2020
- Take more of an omnichannel approach to distribution
Companies and Brands – Key Takeaways
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- Mass retailers get in on the action
- Expanding target audiences
- Heading to the store
Competitive Strategies
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- Two biggest retailers capture share of market
- Amazon
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- Figure 19: Amazon Subscribe & Save
- Walmart
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- Figure 20: Walmart+ membership program
- A look at how some of the pioneers are staying relevant
- Dollar Shave Club
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- Figure 21: DSC exclusive cyber week offer for members
- Stitch Fix
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- Figure 22: Stitch Fix Shop Your Looks
- Birchbox
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- Figure 23: Birchbox educational messaging targeted to “everyday” consumer
- Winc
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- Figure 24: Winc holiday post
- Figure 25: Winc Facebook post targeting investors
- The meal kit trend continues
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- Figure 26: Meal kit usage and interest, June 2020
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- Figure 27: Select meal kit service online ads, 2020
- Spotlight on the leader: Blue Apron
- Newer entrants try their hand at subscription models
- Lululemon
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- Figure 28: Lululemon membership email, September 2020
- Panera Bread
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- Figure 29: Panera Bread MyPanera+ Coffee subscription offer
The Consumer – Key Takeaways
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- Value is in the eye of the subscriber
- Subscriptions “on my terms”
- Managing churn is a challenge
- Majority of nonsubscribers are open to trying a service
- Gifting is an opportunity area
Consumer Trend Drivers and Subscription Services
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- Value
- Experiences
- Technology
- Surroundings
What Motivates Consumers to Sign Up
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- Sign-ups happen when a consumer perceives value from the service
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- Figure 30: Participation drivers, July 2020
- Moms more tuned into the benefits
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- Figure 31: Value and select convenience drivers, by parental status, by gender, July 2020
- Gen Zs and Millennials want to make sure they will like the experience before they sign up
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- Figure 32: Reassurance drivers, by generation, July 2020
What Features Consumers Value
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- Desire for flexibility, choice and a voice
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- Figure 33: Important features, July 2020
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- Figure 34: Stitch Fix email notification about upcoming delivery
- Older generations most demanding
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- Figure 35: Important features, by generation, July 2020
- Multicultural customers want to interact with a human
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- Figure 36: Access to customer service, by race and Hispanic origin, July 2020
Why Consumers Cancel
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- Cancellations are a given
- Price
- Customization
- Quality
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- Figure 37: Reasons for canceling, July 2020
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- Figure 38: Reasons for canceling, by age, July 2020
- Not everyone likes the packaging
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- Figure 39: Cancellation due to packaging concerns, by select demographics, July 2020
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- Figure 40: by Humankind Instagram post about its packaging
Reasons for Not Participating
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- Education needed to address misperceptions
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- Figure 41: Reasons for not using subscription services, July 2020
- Black consumers and Hispanics likely to see subscriptions as out of reach
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- Figure 42: Value-oriented reasons for not using subscription services, by race and Hispanic origin, July 2020
- Online-based subscription services may be too limiting for consumers that prefer to shop in stores
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- Figure 43: Preference for in-store shopping, by age, July 2020
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- Figure 44: Likelihood of buying subscription box in a store, by age, July 2020
Attitudes toward Subscription Services
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- High levels of positivity and advocacy
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- Figure 45: Attitudes related to advocacy of subscription services, by generation, July 2020
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- Figure 46: Spice Madam subscription box
- Figure 47: Allure Beauty Box example
- Incentives can entice increased usage and satisfaction
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- Figure 48: Value-related attitudes, July 2020
- Opting out must be easy
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- Figure 49: Attitudes related to returns and cancellations, July 2020
- Gifting is an opportunity area
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- Figure 50: Gifting incidence, by gender and age, July 2020
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – The Market
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- Figure 51: Online home delivery subscription enrollment, April 2016-June 2020
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