Subscription marketplace Cratejoy has restructured, reducing its 43-person workforce to 25 full-time employees, a company spokesperson confirmed to Retail Dive.
Merchants and subscribers won’t notice any change in services, the spokesperson also said. "This was a hard decision made by the leadership team to keep our costs in line,” he said in an email.
The news comes amid new concerns about weak customer retention in the subscription space. Even market leader Stitch Fix (which offers a subscription box among its service offerings) this week said it would boost advertising in order to corral and keep customers.
Cratejoy expanded the scope of the subscription box concept by selling a curated mix of them to consumers, as well as assisting budding companies in the space in developing their own such enterprises.
Customer acquisition and retention are the sticking points, however. Nearly 40% of subscribers of any service type cancel, according to a report from McKinsey and Co. earlier this year. More than a third cancel in less than three months, and over half cancel within six, McKinsey found.
More recently, data has also shown that shoppers don't see subscriptions in their future, according to new research from GPShopper, a Synchrony solution conducted by third-party research firm YouGov. Twenty-eight percent of consumers said they are unlikely to use subscription boxes to shop in 10 years, according to the study, which was emailed to Retail Dive. And in equally damning evidence, the survey showed that subscription boxes aren't resonating as a portal to discovery either. Just 7% of Americans became a repeat customer of a product and only 8% discovered a new favorite brand through subscriptions.
Ashwin Ramasamy, co-founder and chief marketing officer at PipeCandy, an e-commerce market intelligence company, has doubts about the long-term viability of subscription box services. "I think the independent curation companies are going to have a tough time," he told Retail Dive in a September interview. "We see in our data the number of independent subscription box companies that are into curation - the rate at which they are starting is reducing."
It doesn't help that Amazon last year developed a subscription curation model along the lines of Cratejoy. But that could mean that Amazon sees viability in the model. In August the e-commerce giant expanded its kids book box pilot to all U.S. Prime members, and offers several subscriptions for various consumer goods.
For now, Cratejoy is regrouping, with 18 fewer people on board. "Whenever we’re forced to make hard staffing decisions it is difficult, and this reduction was no exception," the spokesperson said. "We had to part ways with many very good and talented people. We’ve been working to find all affected team members new jobs, and I am confident that those who were affected will land on their feet."