Whistl Identifies Pitfalls & Opportunities For Retailers Launching Subscription Services

subscription box

Whistl, the leading delivery management company in the UK has undertaken research with a representative sample of 1000 UK consumers to establish the key points online retailers should consider when launching subscription services.

The research has established:

  • 86% of purchases are self-gifting. The top three categories for self-gifting are: Food, Beauty and Male Grooming / Drink. As a gift for someone else; Food, Beauty and Art & Crafts are the top categories
  • The top ten influences on the decision to purchase a subscription service are:
1 A treat for self
2 Opportunity to try something new
3 Received offer / discount
4 Received it as a gift from someone
5 Flexibility (pause/ cancel)
6 Bought as a gift
7 Reasonably priced/ cheaper this way
8 One off / trial
9 Unique products
10 Saves time/ convenient

 

Understanding subscriber churn rate

  • There is a high churn rate for boxed subscription services with 44% not continuing a subscription. The top three high churn categories are Food; Beauty; Books & Magazines.
  • Male subscribers have a lower churn rate (33%) than female (51%).
  • The highest churn categories purchased by males Food; Drinks; Books; Grooming. For females, the rate of churn is highest for: Food; Beauty; Arts & Crafts.

subscription boxesThe top three significant reasons to continue an online subscription are:

  • I always have it / I won’t run out; It’s personal / I can pick what I want; It’s flexible / I can pause or cancel when I want.
  • 57% of users have only ever subscribed to one category and 33% are currently subscribed to only one. 43%, in the past or currently, subscribe to more than one category and 23% are subscribed to more than one currently.
  • Those subscribed to more than one category are more likely to be: Male; younger; with children under 18; and living in London.

The most effective source of creating awareness about an online subscription service are:

1 Social Media
2 Recommendation friend / family
3 Searched for it online
4 Website advert
5 Email

Promoting subscription box services

Social media is the most effective way of creating awareness of an online subscription service with women and web adverts for men.

The most effective way to create awareness for different categories of an online subscription service are:

Food Recommendation; TV advert; leaflet through the post
Drink Email; online search; leaflet through the post
Beauty Social media; recommendation; online search
Male Grooming Website advert; social media; TV advert

The importance of discounts and trials

  • Initial offers / discounts / one off/trials have limited impact on influencing a purchase with 76% saying they have no influence and only 7% respondents saying that it was the only reason for purchase.
  • However, 75% of respondents who had taken a subscription service had received a sign-up discount of which 47% would continue when the subscription discount ended.
  • 61% of subscribers have not been offered an extended discount period yet 23% accepted and extended their subscription at a discounted rate.  13% declined to continue without the extension.  Of the 23% who extended a subscription with a discount the most popular categories were Food and Beauty.

Managing and paying for the subscription

  • 77% of subscribers manage their subscription via the supplier’s website but those who offer an app to manage a subscription have the lowest churn of customers with 77% currently signed up.
  • Two thirds of subscribers pay by a recurring card payment or direct debit with 33% through a one-off payment.

Why subscriptions are cancelled

The top ten reasons for cancelling a subscription are:

1 It was too expensive
2 I didn’t always like what I received
3 I got bored with it
4 The discount period ran out
5 I no longer needed the products
6 I couldn’t control what I received
7 The quality was not great
8 It was a gift from someone
9 The deliveries were too frequent
10 The deliveries were not flexible enough

Targeting non-users of subscriptions services

  • Non-users of subscription boxes are typically male, older and less affluent and live in Northern Ireland.  Availability of food and shaving boxes is best known by men with 27% unaware of any subscription service.
  • Female non-users are generally more aware of subscription brands than men with Graze; Hello Fresh; and Abel & Cole the best known. For men Dollar Shave Club and Harry’s lead the awareness popularity table however, over a third unaware of any brand.
  • Non-users would be more open to considering taking out a subscription service if it was: Cheaper than the alternatives; free/ discounted trial period/ Finding a product that I need; better range of products; as a gift for someone else.
  • 39% of respondents would not find any subscription box service beneficial

The top five categories of most interest to non-users are:

1 Food
2 Drink
3 Books & Magazines
4 Music & Film
5 Beauty

 

“Our extensive research shows that it is important for online retailers currently or potentially offering subscription services to understand this complex market of delivering products through the post. There is not a one size fits all approach to this segment of the market.

“Understanding the dynamics affecting subscriber purchase behaviour is crucial to the ongoing sustainability of using this channel to build market share. That is why we at Whistl work with online retailers at every point of the delivery journey to get their product to consumers in the most efficient and cost-effective way.” – Melanie Darvall, Director Marketing & Communications, Whistl

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