After the Great Fire of London in 1666, the ever-entrepreneurial Dr. Nicholas Barbon started the world’s first property insurance company to cover homes and buildings across London from fire. Originally named The Fire Office, but then later renamed The Phoenix Office, Dr Barbon’s business is widely regarded as the world’s first subscription service.
Fast-forward 340 years and there’s a subscription service for almost everything – pet food, make up, clothing, coffee, ready-made meals, fitness apps, entertainment, musical instruments, beer, toilet paper, tampons, fragrances – you name it, and the list continues to multiply. In fact, research shows that the subscription economy grew by a staggering 350% between 2012 and 2019.
As we all know, consumers crave convenience, and it appears nearly everything can be provided via a subscription model. So if your industry hasn’t yet been disrupted, how long until it is? And what can retailers do to be on the front foot?
If you can’t beat ‘em, join ‘em – then beat ‘em
When an online subscription-based competitor pops up, brick-and-mortar retailers should do everything in their power to ensure they can offer customers the same or better service. If Blockbuster were faster to offer the same service as Netflix (or offered to acquire them earlier) would things have turned out differently? We suspect so.
Send out to stand out
Conversely, if none of your competitors are yet offering a subscription service, maybe it’s an opportunity to stand out. Amazon’s Subscribe and Save is a notable example of getting ahead of the game and offering customers the unparalleled convenience of automatic delivery of household essentials. No one likes running out of shampoo or toilet paper.
Variety is the spice of life
There’s no denying that having a mystery package delivered is exciting (it’s like Christmas has come early) and that’s half the fun of subscription services like Bellabox and Craft Cartel, which offer monthly mixed sample boxes of beauty products and beer, respectively. Both are excellent examples of initiatives that big retailers could quite easily replicate and offer to customers.
What about impulse purchases?
It’s undeniable that customers with an active subscription are less likely to come in-store, meaning fewer impulse purchases. Perhaps these customers can be rewarded when they do come in store with extra loyalty points or other little sweeteners. Surely that’s the best of both worlds?