Amazon Prime members more likely to sign up for subscriptions

Dive Brief:

Subscription and other memberships hold a lot of appeal to American consumers across geographies, income levels and ages in many categories, with store signups the most popular (39% hold memberships), product subscriptions the least (less than 20%) and just over 20% subscribing to media services, according to a report from turnaround consulting firm AlixPartners that was emailed to Retail Dive.
A majority (59%) of the 1,000 respondents in the online survey have some level of interest in a subscription of some kind, and interest rises as income does. Among those making less than $50,000 annually, 27% are already members and 32% are interested; for those in the $50,000-$99,999 bracket 36% are members, 23% are interested and for those making $100,000 or more 41% are members and 18% are interested.
Price is the main motivation for signing up for any subscription in most of the country, except the Northeast where convenience is valued most, according to the report. Families with children are more likely than those without to be interested in, or be a member of, a product-based membership, and they're twice as likely to hold a media or store subscription, according to AlixPartners.

Dive Insight:

Subscriptions and memberships provide price and convenience for shoppers, and retailers benefit because those customers are likely to turn to those businesses when they need or want to buy something.

The poster child for this phenomenon — shepherding customers into an ecosystem — is Amazon, and the e-retailer's Prime members are just that — primed for subscriptions (even beyond Amazon). They're three times more likely to subscribe to stores or services; half do and 24% are considering it, while just 16% of non-Prime members subscribe anywhere and just 17% are considering it, AlixPartners found.

Costco is also holding its own here, however, according to another study from retail think tank Coresight Research. Costco is the "winner in terms of comparable sales growth, as well as rapidly ramping its online business," Coresight said in a report on mass merchants released this week. "Costco remains the dominant warehouse-club company, with an estimated nearly two-thirds and more than three-quarters of the total companies' revenues and operating income, respectively, in 2018, and Costco's lead is widening."

Specialty retailers are also increasingly getting into the game, according to AlixPartners' director in New York, Roshan Varma, who noted in a recent blog post that RH and Lululemon have both recently found success with such a model.

"Setting up a services-based revenue stream can create opportunities for higher valuations. However, going a step beyond — into what is essentially a retail-as-a-service model — can lead to several added operational benefits," he wrote, noting that such programs enrich the customer relationship, provide more consistent revenue, lock in customers and present "more opportunities for customer touchpoints as well as an increased flow of relevant data."

Those least likely to capture, or at least hold American consumers' attention are direct-to-consumer plays from less established brands. By far the most — 89% — say they're more likely to start a subscription with a brand they already know and trust rather than an internet startup, according to AlixPartners.