SUBSCRIPTION BOXES: Taking the lid off the real story
2021 . 09 . 24 |
Over ten years ago two entrepreneurial businesswomen had the idea of starting the first beauty subscription box. In a nutshell, they wanted to offer subscribers a curated selection of beauty products in trial sizes for a price equivalent to what one full-sized product would cost. The initial success of this venture, Birchbox, spawned a sea of copycats, not only in beauty but across all sectors such as food, socks, fashion and shaving. Magazines and retailers jumped on the bandwagon. What may have seemed to be a wise strategy, especially during the pandemic when getting a monthly package of newness delivered to your front door was a treat, may have run its course. Has this marketing vehicle worn out its welcome or is there still opportunity to be had? Let’s look at the appeal, the mechanics and the reality.
One of the most compelling reasons to subscribe to a beauty or fragrance box is for the joy of discovery. For anyone who is too busy to go into a store, or who doesn’t have the time to research new brands and products, the box curators take the legwork out. Theoretically the subscriber will be surprised and delighted to receive a package full of things they are unfamiliar with; then, they can discover and experiment at leisure from the comfort of their couch or bathroom. The concept sounds great, especially for small brands who don’t have the marketing budgets of the big players. Certainly the lockdowns of the past two years have also played into the hands of subscription boxes since shops were closed for months, and shopping for new beauty and new fragrances online can be tricky.
How does it work?
Subscriptions vary by provider in terms of assortment and frequency. For fragrance, in some cases the box contains a selection of products from known brands. In other cases, the fragrances are created by the company themselves. In most cases, the subscriptions cannot be shipped outside of the country of origin.
Scentbox in the US is recognized as a leader in this segment due to the variety, the flexibility and the low cost. Every month the subscriber can browse the selection of over 850 fragrances to select one fragrance for which they will receive a 30 day supply (calculated out as an 8ml, which give 4 sprays per day for 30 days). When you get into the details you find there are actually two options. The standard package, with a selection limited to 575+ fairly mainstream fragrances, costs less than $10 in the first month then the following months are about $15. For the Premium package in which the assortment boasts over 850 fragrances and includes Tom Ford, Floris and Acqua di Parma, the first month is around $13 and the following months cost almost $20. I did notice some candles and bath bombs on the list – not sure how these are sampled. Once engaged, the subscription runs month to month and can be cancelled at any time.
Feelunique in the UK, fresh on the heels of being acquired by Sephora, has just launched its Beauty Box. The subscriber picks 5 deluxe samples from an assortment of 180 products in the categories of skincare, makeup, fragrance and more. Subscriptions can be bought as a one shot (£13,95) or on a monthly basis from 3, 6 or 12 months, the best deal at £11.95 per month. There is of course the option to cancel at any time. In regard to fragrance, the selection was limited to Ghost, YSL Libre and Nuxe.
In France, Le Box AuParfum focuses the assortment on niche fragrance. Every other month the subscriber receives a box containing four scents (5ml) selected by the AuParfum team. On the 10th day of the month, the subscriber can purchase any of the scents on the AuParfum site and benefit from a 15% reduction - a tangible benefit. The July/August box included Ad Libitum-Pigmentarium, Nomen rosae absolu – Castello di ama, Compliment- Violet and Lys Solaberg-Maison Crivelli. Subscribers may pay 29€ per box or 149€ for the year, and they may cancel at any time.
The aforementioned Birchbox has expanded its reach outside the US to Canada the UK and France (recently rebranded as Blissim). The subscriber completes a profile and will then receive a curated box of 5 deluxe samples across several beauty categories based on their responses. An annual subscription in the US costs $13 per month. Birchbox entered and exited China largely because the concept was not in line with consumer habits where people are less inclined to commit to a monthly purchase with automatic rebilling.
In some cases the business model is masked as a subscription but there is no monthly obligation. For example, Snif is a direct-to-consumer company in the US who claims, “We bring the fragrance counter to you”. In fact, this company creates their own fragrances using “premium ingredients without the perfume counter drama”. Further, the scents are clean, vegan, cruelty-free and genderless. Subscribers can order a 30ml single fragrance + 2ml sample or a bundle kit of three 30ml scents plus a 2ml sample of each. At home they test the sample then decide what to keep. A single fragrance costs $65, all three cost $150 so there is a savings. The company pays for return shipping of the scents the consumer doesn’t want.
Earlier this year we reported on Fiole.UK which bills itself as the first virtual perfumery. In this case the consumer goes through a well-thought out diagnostic which pinpoints a range of fragrances from niche and artistic brands which correspond to their preferences, then they order a discovery box of 6 fragrances for trial at home. When they select what they like the can order from the Fiole site and the cost of the box is automatically deducted at checkout.
Another interesting product comes from UK online beauty retailer Escentual who creates a monthly Blind Trial Discovery set. Another “try before you buy” model, what’s unique here is that the names of the fragrances are kept a secret. The consumer is encouraged to join Escentual’s Facebook group where they can share their opinions on the scents along with their love of fragrance. The names of the fragrances in the box are revealed to the group at specific times of the month, or by email. This is a great example of building community, increasing knowledge and making fragrance discovery fun and interactive.
What are the numbers?
According to surveys in the US, the UK and in France, Beauty boxes are the most successful in terms of gathering monthly subscribers, when compared with other product-driven boxes.
In the US, WWD quotes a study by Emarsys which states that subscribers make up 32% of US consumers. Further, they report that 23% of subscriptions are for beauty boxes as opposed to 19% for food and drink and 15% for fashion.
The Royal Mail reported that consumers spent £1.4 billion on all kinds of subscription boxes in 2020 and they predicted the market to grow to £1.8 billion by 2025*. One third of Brits sign up for beauty boxes. A survey from Cosmetics Business focused on the UK found that nearly 75% of those surveyed felt the subscription box makes it easier to buy beauty. Over half said the main reason for subscribing was for the excitement of receiving new products while one third stated it was to discover new beauty products. Nearly half of the respondents said they would pay between £10-$25 for a box, one third would only want to pay £10, and less than 2% would pay over £50. So much for luxury boxes then!
In France, a study by Toutes Les Box in July 2020 found that subscribers to all boxes in the country topped out at under 1 million, or less than 2% of the population. Women make up 76% of the subscribers and 80% are aged between 18 - 44. NPD reported an increase of +10% on Beauty Boxes for the one-year period ending February 2021.
Do subscribers cancel?
Opinion vary on this topic. Retail Dive found that 45% of subscribers to any kind of box stay for at least a year whereas the Emarsys study found that the average American cancels their subscription within 6 months and that only 5% stay for a year. Toutes Les Box reports that 65% of subscribers in France cancel after 6 months. A source in the US told me “People buy the subscription box and then drop off after 3 months. They think it’s cool at the start, then they get the second box and realize they are getting charged. They ask themselves; Do I still want this? And then they cancel in the 3rd month”.
From a brand point of view the goal of participating in a third party, multi brand box, like Birchbox, is to access a new clientele, gain notoriety and build the consumer base. Certainly, beware that the bigger the box distribution, the larger the demand for sample quantities. Birchbox in the US has over 800k subscribers while its French sister, Blissim, has around 220k.
Boxes can be a viable option but education plays a big part. Consumers get the thrill of the new, but if they don’t know how to use the product then the excitement is lost. If there isn’t an educational element or an incentive to build loyalty there is less value for the subscriber. An online tutorial with link indicated on the sample or in a box leaflet could be helpful to demonstrate and instruct on product usage for example. Likewise, an invitation to join an online community could be a step in building the relationship with the consumer.
*Subscriptions included Netflix, meal services, coffee and tea programs and many other categories.
Feelunique rolls out first innovation following Sephora merger (cosmeticsbusiness.com)
Cosmetics Business reveals the 5 key fragrance trends of 2021 in new report
Beauty Boxes Most Popular Subscription Service, Data Shows – WWD
Why Subscription Boxes Flopped in China | China Decoded, BoF Professional | BoF (businessoffashion.com)
Pandemic opens beauty shoppers up to subscription boxes (cosmeticsbusiness.com)
Vintner's Daughter takes a 'girlfriend-to-girlfriend' approach to new subscription program – Glossy
Pure Beauty Magazine, May 2021