Subscription services continue to grow, but what do they really tell retailers about the future of global eCommerce

Subscription services continue to grow, but what do they really tell retailers about the future of global eCommerce

 

There’s no shortage of subscription services available online and retailers should consider what it’s about this model that attracts the modern consumer. In a retail landscape that is constantly shifting, shoppers have more options than ever before, and many can find the amount of choice overwhelming.

This is where Stitch Fix, a mail-order subscription clothing service, comes in. The brand avoids slashing brand prices and offers little choice to its subscribers, instead choosing items for them based on data-analysis of their personal preferences.

CEO Katrina Lake says that what makes Stitch Fix stand out is that rather than focusing on innovating to become cheaper and faster, they expend their energies simply making it easier to shop, and providing clothes the customer loves without the traditional lengthy shopping trip.

Stitch Fix do this by offering a monthly package containing five items of clothing, with free returns on anything customers don’t like and a 25% discount when a customer buys the entire box. Items are chosen by mining data based on a lengthy style preference form which covers everything from clothing needs to preferred price points. With over 3,400 stylists on hand, Stitch Fix tailors stylists to the customer’s preferences.

The business model may seem to ignore conventional wisdom, yet the brand continues to show phenomenal growth, recording 730 million USD in sales and raising 42 million USD from investors. Should the brand decide to go public, it would likely be the biggest retail offering since Etsy in 2015.

Similar subscription service solutions include Birchbox, and Trunk Club, but experts in retail are sceptical about the sustainability of such models. Mark Cohen, a professor at Columbia Business School and former Chief Executive at Sears Canada, says,

“Those businesses have mostly struggled to grow and remain profitable over a long period of time. Will a loyalist want to receive this every month? Is anyone interested in consuming this much apparel and accessories?”

eShopWorld Insight:

Although the subscription model is yet to prove itself in a truly scaleable way, it’s an indication of where the customer’s needs lie. Easy, seamless online shopping is paramount and mining data to create meaningful user experiences will be essential to standing out in an increasingly saturated online space. Personal styling, customization and tweaking services to put the customer first are all key components of an effective online brand strategy. 

Source: The New York Times