Why Subscription Boxes Succeed

Cratejoy’s Co-Founder Amir Elaguizy Provides Expert Analysis in New Clutch Report

The subscription box economy is booming and more than half of online shoppers (54%) say they are a member of a subscription box service, according to new data from Clutch, a B2B research firm in Washington, D.C.

Cratejoy’s co-founder Amir Elaguizy spoke to Clutch on the data, providing industry insight into how subscription boxes grew so popular.

Elaguizy noted three trends that motivated the growth of the subscription box industry:

  1. The growth of e-commerce
  2. Increased use of social media
  3. Consumers’ comfort with paying for value over time

E-Commerce and Subscription Boxes Aren’t Separate Entities

E-commerce sales surpassed those that happened in stores for the first time in 2019. 

Elaguizy mentioned that as e-commerce grows, subscription box services become increasingly intertwined with it.

“It used to just be, you’re a subscription box or you’re an e-commerce company,” Elaguizy said. “Now it’s just all direct-to-consumer e-commerce. Sometimes they have subscription and sometimes they don’t.” 

Consumers display significant demand for subscription box services, spurring the growth of the industry.

“Consumers have accepted the model,” Elaguizy noted. “They accepted that curated personalized products being delivered to their door on a regular basis is high-value and they’re interested in it. Now it’s being integrated in all sorts of places.”

Social Media Shows Value of Niche Interest Groups

How could entrepreneurs know just how many people love cryptozoology or vegan jerky before social media?

While big-box retailers cater to the interests of many, subscription box services can be niche and hyper-personalized.

“Because these folks are spending all day, every day talking to each other [on social media] about things they’re passionate about, they’re discovering new passions [to profit from],” Elaguizy said.

For that reason, he notes, these conversations can lead to new subscription box businesses.

“The engagement of social media has allowed people to develop much more nuanced interests, and that has created this market where people who understand those nuances … come together and say, ‘I can put together an experience that nobody else will.’”

Consumers Will Pay for Value Over Time

Finally, consumers are now more comfortable with putting a credit card on file for recurring payments, trusting that the value they receive in the long-term will be worth the payments, even if every box isn’t a hit.

Elaguizy attributed this growing comfort to services like Netflix. 

“Even things as simple as Netflix help make consumers comfortable with the idea that I’m putting my credit card on the website and I’m going to receive ongoing value from that transaction,” Elaguizy.

Overall, Elaguizy noted that curated subscription boxes will continue to grow as long as businesses emphasize personalization.

“[Subscription boxes are] about the fact that somebody who understands me specifically took the time to sit down and put together a selection of products, physical and digital, and wrapped them in an experience that feels like a dear friend put it together,” Elaguizy said. “What we’re seeing is more and more folks realizing that curation and personalization are the future.”

Riley Panko is a Senior Content Developer and Marketer at Clutch.

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