Christine Esposito, Associate Editor12.03.18
Who doesn’t love getting a package delivered—especially this time of year? Subscription services push them out year-round these days, delivering convenience, money savings and accessibility to a wide array of products ranging from contacts to clothing to craft beer.
“Time and convenience are valuable to people, more than ever. It’s why so many people choose to shop online. And with subscription services, the work of choosing is done for you. Time is valuable, and everyone is focused on eliminating hassle and providing valuable experiences to consumers instead of one-time transactions,” said David Bilicic, senior vice president at Magid, a business strategy and custom research consultancy with multiple offices including New York and Los Angeles.
In the beauty business, Birchbox is perhaps the best known; it currently operates in six countries and, by its own count, reaches more than 2.5 million active customers. Others include Ipsy, Scentbird and Facetory, to name just a few of the many current offerings catering to select consumers and product categories, too, such as fragrances and sheet masks.
In addition to common drivers for all subscriptions, namely convenience, money saving and accessibility, “for beauty-based sample box subscriptions there is also an element of fun given the ability to try several things before committing to a full-size purchase,” said Bilicic.
According to a recent study conducted by Magid, in the beauty/grooming category, just 17% of US households have an active subscription.
That leaves plenty of room for growth, and the immediate future looks promising, according to Magid’s data.
Beauty subscriptions have a high interest level with 27% of households indicating an intention to enroll in a new subscription of membership within the next six months, noted Bilicic.
“It is critical for manufacturers and brands to better understand what consumers want in subscription programs and embrace the insights to both protect and grow their business. Subscriptions are not going away any time soon and have strong growth prospects,” he said.
Among current subscribers, Millennials make up 54% of the beauty/grooming market, while Gen Xers represented the second largest share of the market, at 25%.
Women aren’t the only ones who like to receive something in the mail. The subscription service model shows great promise men, too.
In its research, Magid learned that across the broader subscription market (spanning 14 categories) 52% of subscribers are men, and specific to the beauty/grooming category, 44% of subscribers are men.
“While this is likely driven by the shaving category, it is interesting to note that across the majority of categories we looked at men are generally more likely to receive a subscription or membership as a gift than women. A notable exception to this was the beauty/grooming category,” said Bilicic.
When building a strategy for subscription, Magid’s expert warned that companies need to be creative, not just punctual, to keep consumers on board.
“Some of the challenges for beauty brand subscriptions largely reflect the broader market,” said Bilicic. “Looking at the Magid dataset, we see that when people sign up for a subscription, they like the idea of something new. Then they’ll have the subscription for a few months and realize they don’t use it enough or don’t get the value out of it – and they drop off. Consistently coming up with a curated set of offerings that hit the mark with consumers is a real challenge for beauty brands.”
“Time and convenience are valuable to people, more than ever. It’s why so many people choose to shop online. And with subscription services, the work of choosing is done for you. Time is valuable, and everyone is focused on eliminating hassle and providing valuable experiences to consumers instead of one-time transactions,” said David Bilicic, senior vice president at Magid, a business strategy and custom research consultancy with multiple offices including New York and Los Angeles.
In the beauty business, Birchbox is perhaps the best known; it currently operates in six countries and, by its own count, reaches more than 2.5 million active customers. Others include Ipsy, Scentbird and Facetory, to name just a few of the many current offerings catering to select consumers and product categories, too, such as fragrances and sheet masks.
In addition to common drivers for all subscriptions, namely convenience, money saving and accessibility, “for beauty-based sample box subscriptions there is also an element of fun given the ability to try several things before committing to a full-size purchase,” said Bilicic.
According to a recent study conducted by Magid, in the beauty/grooming category, just 17% of US households have an active subscription.
That leaves plenty of room for growth, and the immediate future looks promising, according to Magid’s data.
Beauty subscriptions have a high interest level with 27% of households indicating an intention to enroll in a new subscription of membership within the next six months, noted Bilicic.
“It is critical for manufacturers and brands to better understand what consumers want in subscription programs and embrace the insights to both protect and grow their business. Subscriptions are not going away any time soon and have strong growth prospects,” he said.
Among current subscribers, Millennials make up 54% of the beauty/grooming market, while Gen Xers represented the second largest share of the market, at 25%.
Women aren’t the only ones who like to receive something in the mail. The subscription service model shows great promise men, too.
In its research, Magid learned that across the broader subscription market (spanning 14 categories) 52% of subscribers are men, and specific to the beauty/grooming category, 44% of subscribers are men.
“While this is likely driven by the shaving category, it is interesting to note that across the majority of categories we looked at men are generally more likely to receive a subscription or membership as a gift than women. A notable exception to this was the beauty/grooming category,” said Bilicic.
When building a strategy for subscription, Magid’s expert warned that companies need to be creative, not just punctual, to keep consumers on board.
“Some of the challenges for beauty brand subscriptions largely reflect the broader market,” said Bilicic. “Looking at the Magid dataset, we see that when people sign up for a subscription, they like the idea of something new. Then they’ll have the subscription for a few months and realize they don’t use it enough or don’t get the value out of it – and they drop off. Consistently coming up with a curated set of offerings that hit the mark with consumers is a real challenge for beauty brands.”
