Report: Birchbox, Dollar Shave Club lead subscription retail growth

Dive Brief:

  • Subscription retail is still a tiny portion of e-commerce (which remains a small portion of all retail sales), but it’s growing fast: There were more than 21.4 million U.S. visits to subscription box retailers in January 2016 in the U.S., according to a customer industry index analysis by Hitwise reported by Chain Store Age. That’s nearly a 3,000% increase year over year.

  • Beauty subscription retailers Birchbox and Dollar Shave Club tied in January among subscription services, each logging 3.6 million visits to their sites each, followed by curated subscription retailer Loot Crate with 3.1 million, Hitwise found. Fresh meal curator Blue Apron had 2.6 million U.S. visits and snack curator Graze saw 1.3 million.

  • Non-subscription retail site visits to 500 of the top e-commerce retailers grew 168% in January, according to the report.

Dive Insight:

While subscription services remain an extremely small part of retail, they are growing, as this Hitwise (now owned by Connexity) study finds.

While search is the primary driver to these sites, visitors skewed toward mobile and were heavily influenced by social media. More than half (53%) of U.S. visits to subscription box retailers were from a mobile device, compared with more than a third (35%) of online visits from mobile overall. Some 13.5% of referred visits to subscription box sites in December last year came from a social media site, compared to 8.4% to other retail sites, according to the study. Searches sent 34% of referred traffic to subscription retail sites in December, compared to 40.7% for retailers overall. Search becomes more important for subscription box retail as people become more aware of it, according to Hitwise, which pointed out that online visits to subscription sites grew 20% in 2015.

In a way, subscription retail taps into the growing consumer desire to spend money on experiences over stuff—even though the subscriptions involve stuff. “What’s interesting is that these players are coming up at a time when personalization is a core value proposition,” Jenny Shen, senior research analyst, beauty & CPG at benchmarking and research firm L2, told Retail Dive earlier this year. “Another value proposition, as with Trunk Club, is the personalization of the experience.”

The space was a popular one at the holidays, too. 8.6 million Americans (Hitwise says that’s 4.3% of the “online population”) visited one of the 127 subscription retailers indexed by Hitwise over the holiday season. Most were 25 to 39 years old and most were female, Hitwise found.

Like Hitwise, subscription management platform Recurly sees increased action at subscription retailers: On Cyber Monday alone, subscription-based retailers saw a whopping 230% jump in total payment volume compared to other days during the study period, and a same-store sales jump of 73% year-over-year. Over the four-day holiday shopping weekend (Black Friday to Cyber Monday) same-store subscription sales rose 70% year over year, Recurly added. 

Recurly CMO Fred Felman believes that is due in part to subscriptions feeling like a highly personal gift while costing less than other big-move gifts, like jewelry.

“When I look at it, it’s really the curation that’s happening here that’s driving the gift elements of it,” Felman told Retail Dive. “Curating and the experience of it that sometimes transcends the good itself. The other seed is convenience, although that’s not the holiday story. And another is quality—people renew, and that’s what makes revenue go.”

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Filed Under: Consumer Trends E-commerce
Top image credit: Birchbox Facebook