Sample Subscription Boxes: The End of a Business Model?

Okay, you got me – the title might be a little sensationalist. Birchbox, a sample based subscription, is still one of the largest and well-established subscription boxes that exists in the market today. But the point is there: sample subscription boxes just don’t seem to get the same attention as they once did, and that may be signaling a serious shift in the subscription marketplace.

In 2011, at the dawn of subscription commerce in its current form, the idea was extremely novel. While there had been wine clubs and subscription based services for decades, this was a new idea: a monthly box curated with goods you’d love. This new form of subscription commerce was born from the plethora of choices provided by the internet, the increased ease and affordability of shipping, and the desire for enhanced convenience. This was something new.

2011: The Birth of New Subscriptions

2011 is when Birchbox really began to define the new market. They worked with cosmetic businesses to put their samples in the hands of “qualified” consumers who wanted to discover new products. For the beauty industry, this made tons of sense. Samples are a powerful way of getting people to change their brand choice, and are relatively a low-cost means to customer acquisition.

We had the same idea at Conscious Box, but for natural products. In July of 2011, we began brainstorming and developing the product for what would eventually become another large and successful subscription business. Conscious Box helped people discover natural products for every part of their life, and we did so by almost exclusively including sample products.

Like cosmetics, this made sense. Customers knew they wanted something new, but the product testing lines at retailers like Whole Foods were cumbersome, not always enjoyable, and far from time efficient. Few make their way to Green Festivals. In response, Conscious Box cut through the noise and brought those same products to thousands of doorsteps every month. For our niche, the question was a simple one: Who wouldn’t want to try 10-20 natural products every month for the cost of a movie ticket and some popcorn?

How the Growth of Subscription Commerce Has Changed the Market

While sample based subscription initially were attractive, more recently this set of value propositions is facing increased scrutiny. Consumers are losing interest in what this type of subscription offers (discovery) and are more concerned with something else (value).

Since 2011, there have been hundreds – actually thousands – of subscription businesses popping up. The one thing many have in common: more full sized products. One clear example is the dominating success of new boxes like Boxycharm vs. Birchbox. Boxycharm is including more full-size products, and getting great results because of it.

And the reason is clear: consumers want something that feels valuable. While the value propositions of discovery is a strong one, when that discovery is paired with hefty, valuable (feeling) items, the product experience is greatly heightened. Even subscriptions that historically relied on samples are more often including a “hero product” – a full size item that helps subscribers feel the sense of value.

And I’m not the only one taking notice.

More and more sample-based subscriptions are seeing that customers are eager for heightened product experience. Birchbox itself seems to have made adjustments. Anecdotally, the last two months my Birchbox man has come with a non-disposable razor one month and reusable a water canteen another month. I was a bit surprised with the fuller sizes, “permanent” items in my sample box. Conscious Box has done the same, and so have many others.

Sample Subscription Boxes Business Aren’t the “Thing” Anymore

So, while sample-based subscription boxes are still large and, in many ways, thriving (just look at Bulu Box), this style of subscription arguably isn’t really the thing anymore, especially with startups.

On the one hand, samples are quickly being gobbled up by competitors. In this more competitive environment, some companies (like Bulu Box) champion their data collection and feedback reporting on products – surely a valuable resource for vendor partners, but something that can be a challenge for new business owners, and arguably more suited for some niches than others (supplements vs. educational goods, for example).

On the other, customers are wanting bigger, better items in their boxes. Hero products add to customer experience and in turn, increase retention, one of the most important measures of success for a subscription business.

In response to these changes, some sample-based services are turning to cost-sharing scenarios, where the company buys product samples at a low-cost, something that Birchbox is confirmed for doing (namely because of their large volume). This changes the conversation with manufacturers from the start: you’re no longer asking for free product, but rather sharing the burden of production and shipping, and unlocking those cheap prices by the marketing services your subscription box provides.

A New Path Forward: A Better Experience for All

Looking over the last four years, the result of the early boom of sample based subscription businesses is clear: the supply chain for samples is disrupted, as well as the demand from customers.

And it may not be for the worst. Because subscription businesses are relying on purchased products more often, it gives business owners the real chance to curate their boxes. It makes the customer experience all around better, and when intelligently executed, business owners can still negotiate solid prices from vendors.

So is it “bad” that sample subscriptions are losing some momentum? Not at all. This  change benefits the brands (covering costs of production), improves the experience for customers (higher quality, more valuable boxes), and provides a dialogue that can be a foundation for real curation for subscription box owners.

What does this mean for existing sample product subscriptions? First off, a delicate shift in procurement and sourcing. You should intelligently update your sales materials, tier products based on size and value (and use those tiers as a means to judge if you should purchase products or not), and update existing vendors relationships as needed – and courteously at that. There’s no reason to think your entire supply chain will be turned upside down, but you should start thinking about how to review your COGS and ensure that customers, vendors, and the product will be taken care of.

For more on this change and sample procurement, there’s a great article by Jameson Morris on his personal blog.

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