Why Traditional Retailers Are Trying Subscription Box Services

Monthly subscription boxes | Shopify Retail blog

Walmart, Sephora, Amazon, CVS, and Lancôme — these traditional retailers probably aren’t who you’d expect to feature popular subscription box services. But these monthly box services are no longer just for mom-and-pop ecommerce merchants. Thanks to their overwhelming popularity, big companies are trying their hand at the curation game, and the space may never be the same.

Only a few short years ago, retail analysts were gushing about subscription boxes. From snacks to wine to fashion, online shops were popping up left and right, giving consumers something that big box retailers were not — a carefully crafted, delightfully executed collection of merchandise, seemingly made-to-order and delivered right to your door.

Many consumers were delighted about the new offerings. Countless unboxing videos popped up on YouTube, producing new subscribers, and media outlets kept track of all the latest services and unique box offers springing up across the web.

But as with any big trend, traditional retailers sat up, took notice, and many are trying their hand at boxed subscription services themselves. Lancôme launched their auto-replenishment service, Sephora set up a beauty box with their samples, Amazon started up a subscribe and save program, and even brick-and-mortar behemoth Walmart has launched both a baby and beauty box.

An exciting product concept that inspired new startups almost daily now looks saturated and ultra-competitive at first blush. Is there still promise in the subscription box space for brick-and-mortar shops and in-person sellers who want in on the trend?

Based on a recent report from Hitwise, there’s plenty of indicators that there’s still opportunity in the market. The study shows visits to a bevy of subscription box sites like Dollar Shave Club and Birchbox have increased almost 3,000% in the last three years, and that traffic is only expected to increase.

Fortunately, using a little ingenuity and some old-fashioned research, there are still ways to fulfill consumer dreams of a highly curated subscription box service. Here are a few strategies to consider for your shop.

Find the Gap

You don’t want to go head-to-head with retailers like Amazon and Walmart, but even the giants can’t do everything. Look closely at retailers already in the space to see what they’re doing and what’s missing from their offerings. Then, do a bit of market research to determine if there’s a demand for that gap.

Walmart baby box | Shopify Retail blogWalmart’s baby box for example, provides a few small essentials at a very low cost. Cheap and cheerful is one angle, but there are so many parenting styles that create countless opportunities for customized boxes.

A couple of soothers, detergent, and wipes are useful, but those aren’t the only things babies or parents need. The Honest Company has made it big with their easy disposable diaper subscription. Mori sends parents new outfits for babies, adjusting the size of each shipment to grow with your baby. Bluum’s boxes combine products for mom and baby. Other subscription services focus on pregnancy or toys and clothes for older kids. TTC Crate sends care packages to women trying to conceive. 

There are lots of baby and parent subscription services, but there are still gaps even in this crowded category. Is your storefront or product more geared toward dads? What about older siblings? Online consignment shops could compete with the clothing services at a fraction of the cost. Fair trade toys and organic clothing or baby food are also big trends, and could deliver something that new parents need regularly.

Bluum box | Shopify Retail Bluum box | Shopify Retail

Photo credit: Mori and Bluum

Baby/parent is just one category, but the advice can apply to any vertical. Find your potential competitors and determine what they’re not doing, then see if there’s a market need for the gap. If there is, try filling the void. 

Try Upmarket or Downmarket

It may be hard to beat Walmart on price, but you don’t necessarily have to. Ritz-Carlton doesn’t compete with Motel 6, even though they both offer overnight accommodations.

Opulent box | Shopify RetailThe $25,000-a-quarter Opulent jewellery box subscription is beyond the reach of most consumers, but demonstrates that the sky’s the limit when it comes to certain categories of merchandise.

On the flip side, maybe what the big retailers are offering is more upscale and perhaps you can compete on price. If you have a line of independent beauty products, you may be able to create a boxed collection at a lower cost to consumers than Sephora can currently provide.

Where there’s a group of products consumers want, there tends to be varying pricing sweet spots, depending on the market segment. If one end of the market seems saturated, look toward the other end of the spectrum and see what you can collect and offer.

Find Your Niche

Some of the most interesting subscription services may seem quite niche, but with Shopify, you can expand your offerings to multiple countries abroad; there are probably many people around the world with tastes just like yours. With a potential consumer base of that size, you can potentially turn a passion into a subscription business.

Death Wish Coffee | Shopify Retail blog

Photo credit: Death Wish Coffee

Subscriptions are working for a variety of very niche products. For example, do you love coffee so strong it’d make a spoon stand on end? Death Wish Coffee has a subscription for that. Love delicacies from around the globe? Give Try the World a shot. Want homestyle BBQ delivered right to your door? Pig of the Month BBQ can feed your carnivorous cravings. Can’t get enough old-fashioned heirloom beans? Yep, there’s even a subscription box for that.

It doesn’t have to be food — men’s health supplements, zany ties, kid’s stickers, or virtually anything you’d want to collect or re-use could have a cult customer following. While these interests may seem hyper-specific, they could be mighty if you can find more like-minded fans. Find your target customer and lifestyle and curate items that would delight that niche group. And with a storefront, you already have a customer base to draw upon and test your box for proof of concept.

Make Unboxing an Experience

One of the hallmarks of a great subscription box service is the beauty of the presentation. Watch some of the unboxing videos on YouTube and you’ll see recipients are just as excited about the experience of opening the meticulously crafted packaging as they are about the items inside.

Walmart’s baby box is cute, but it’s fairly basic next to A Little Bundle’s reusable cotton sacks, or Bumby Box’s hand-wrapped and ribbon-secured activity sets.

People love experiences, and adding a special touch to your packaging or presentation can bring an extra bit of surprise and delight to an already wonderful service. A survey from Dotcom Distribution they found that 52% of consumers are likely to make repeat purchases from a merchant that delivers premium packaging. So, weigh everything from the type of box to the packing materials to the placement of products within the box to create a memorable unboxing experience for your brand.

Find the Boarded up Shops

Birchbox Canada message | Shopify Retail blog

Photo credit: Birchbox Canada

Some people use the prototyping methods mentioned above and quickly pivot when they find their approach had little uptake. Others found themselves squeezed out due to increased competition, and finally some people decide to do something else entirely. Whatever the reason, doing a search online for subscription boxes will turn up shops that have boarded up their virtual windows.

It’s important to look at these shut-down businesses and think critically about why they closed — you could glean some important insights for your own business plan. Was there not enough demand? Was supply not readily available? Was it a trend and interest waned? Or were overhead costs too high? Take the chance to absorb their hard-learned lessons so you can avoid making the same missteps. 

For example, beauty box success story Birchbox recently shut down Canadian operations, citing high exchange rate and shipping costs as the reason.

Some factors of failure like this may be out of your control and could serve as a good gut-check to ensure you’re on the right path with your idea.

Gift It

One of the greatest appeals of subscription box services is that they make fantastic gifts. Stretch out your best friend’s birthday gifts over a year, or make the lives of new parents a little easier with new, useful merchandise each month. It’s an easy sell as an ideal present. No matter the reason for the gift, make it easier for your shoppers to gift your box with these tips:

  • Allow customers to enter a different shipping address at checkout than their billing address.
  • Allow customers to enter custom gift messages.
  • Offer a gift wrapping option.
  • If your box contents are customizable, consider offering gift cards, so the recipient can come back to your shop and curate their subscription service themselves.
  • Offer a loyalty rewards program so that people buying gifts are incentivized to use your subscription service more than once.

How to Build Your Subscription Box

The hard part is over — you’ve decided what subscription box service to offer, at what price point, and for what market segments. Now it’s time to launch your new subscription box service to the world.

Fortunately, Shopify has most of what you need as a standard feature set — and with a plugin or two, you can easily automate subscription service tasks like recurring billing, payment plans, memberships, and pre-orders.

Here are a few subscription plugins available in the Shopify app marketplace that may suit your needs:

Final Word

Subscription boxes fulfill a consumer desire and they don’t seem to be going away. Having big retailers enter the space only validates how much they’re in demand, but it’s also a sign that competition could be stiff. However, if you do your homework, you may be surprised to find an underserved market just waiting for you.

Now, get studying and let’s see what monthly delights you can deliver.

Guinivere Orvis | Shopify Retail

About The Author

Guinevere Orvis is a media strategist, former digital producer, and mother of two young kiddos. She holds an MBA from Ted Rogers School of Management and is enamored with her adopted city of Toronto.