Subscription Services are Delivering Success
It looks like the convenience, choice and speed, provided by companies both large and small, is winning the battle for business.
As an example, take HelloFresh. They are delivering to 1.25m customers in the UK with their recipe boxes that promise simple and delicious meals with no planning and minimum hassle. Behind the scenes, a huge data-driven technology platform puts them in the prime position for disrupting the food supply chain and for fundamentally changing the way consumers shop for food.
The soft subscription model business enables them to leverage their weekly subscriber touch points to consistently manage supply chains and demand and to optimise the customer experience as well as their business economics. HelloFresh has serious ambition: they say: “We are at the forefront of disrupting a multi-trillion-dollar industry at the very beginning of its online transition”.
It’s increasingly hard to resist the move to subscription services. To name just a few: Netflix and Amazon Prime for home and personal entertainment; HelloFresh and Graze for meals and snacks at home; JanePlan and Slimfast for diet meals; fashion from Dior to JD Williams; food delivery from Uber Eats, Deliveroo and Just Eat; Broadband from Virgin, BT, Sky and more; Furniture and Fittings from wayfair.co.uk, and of course the three biggies in grocery delivery: Asda, Sainsburys and Tesco. And for gamers, they can reap the rewards of Xbox Gold Live which offers the chance to get new games every month at no additional cost.
And exciting things are happening with monthly deliveries of cosmetic and beauty products for £10 to £60 per month. One of the original and market leaders is Birchbox, for those who are yet to try out a beauty box subscription service. It is an affordable way to test out some of the best new products on the market. Each box contains a little zine, which describes the products and their uses, as well as a sneak peek at what is to come in next month’s offerings.
Why would anybody ever leave the house? Well, people still have to go out to work to earn the money that pays for all these convenient services, plus there will always be a cohort of people who enjoy the real-life shopping experience. The key to enhanced profitability for subscription businesses is selling products that are good enough to lengthen the life of the average subscription. Subscription companies are always trying to replace the subscribers that leave and increase their subscriber base. The cost of doing that, called Customer Acquisition Costs, is one of the most important keys to a subscription company’s profitability and success.
So, everything that can be delivered is being delivered to the front door, tailored to the unique needs of each person or family. But what about the actual delivery companies, who are the most important leg of the triangle after choose and pay? The days are gone when customers would accept a four-hour delivery slot and wait patiently for their goods to arrive. Further customisation is now the norm. As well as tracking deliveries which some companies offer, other delivery companies have been leading the way in their role as the critical fulfilment step in the process. DPD, for example, launched a new app in 2015 called Parcel Wizard, which gives customers the flexibility to have parcels delivered to work, home, or on the go from various retailers. That is the level of service that the consumer has come to expect.
Subscription services are here to stay.
If you think your company deserves an award for an excellent subscription service, or a delivery/logistics service, complaint handling, and 19 other categories, take a look at www.ukbizawards.com. If you’re not in, you can’t win!