subscription boxes: are they worth the money?
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10/15/2015 Subscription Boxes: Are They Worth The Money? Forbes
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PERSONAL FINANCE 5/16/2014 @ 9:29AM 62,907 views
Subscription Boxes: Are They WorthThe Money?By Marianne Hayes
This post originally appeared on LearnVest.
Whether you’re a beauty junkie, foodie or DIYaddict, chances are there’s a subscription boxservice out there to scratch your itch.
If you’re not familiar with this relatively newretail trend, subscription boxes are a fastgrowing business model in which companieslike BlueApron, JewelMint and ShoeDazzle curate andsend everything from prepackaged dinneringredients to baubles or shoes straight to yourdoorstep.
Most companies require new users to complete aprofile survey to determine their personal stylesor tastes. Some surveys can be completed on acommercial break; others are as indepth as aneHarmony profile.
Once your profile is complete, you’ll receivemonthly boxes in the mail with specialtyproducts “handpicked” just for you. Today theboxes you can get delivered straight to yourdoorstep number at least in the hundreds, andare tailored to everyone from new moms toFrancophiles to fishing enthusiasts.
The monthly subscription price ranges from $10per month at beautycentric Birchbox to upwardsof $100 for more indulgent, highend items, likeluxury body oils and spaquality antiagingserums from MonthlyExpress.
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10/15/2015 Subscription Boxes: Are They Worth The Money? Forbes
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All you have to do is scroll through yourFacebook feed for pictures of your friends’ latestdeliveries (or see a targeted ad or two) to findevidence of how popular these services havebecome.
Why a flurry of subscription boxes now—andwhat is their secret sauce? To find out whetherthis new trend is worth the monthly expenditure,we turned to consumer behavior pros and reallife subscribers to share their insights.
Box Pop: A New Industry Is Born
Birchbox, arguably the most recognizable servicetoday, put the subscription box retail trend inmotion with its 2010 launch. Specializing inbeauty, grooming and lifestyle products,subscribers pay $10 (for women) or $20(for men) per month to receive goodies like skinrejuvenators, fragrances and makeup. Now thecompany has 800,000 active global subscribers,according to company rep Brittany Tomkiewicz—which translates to $96 million in annual sales.
In just four years since its inception, the industryhas exploded. “[Subscriptions] represent asignificant retail trend,” says Virginia Lee, seniorresearch analyst with market intelligencefirm Euromonitor International. “With the glutof products available in stores, many shopperslike the curation factor of these subscriptionboxes.”
As the trend spills over into countless retailcategories, the opportunity for expansion onlygets stronger. Lee expects the U.S. subscriptionbox businesses to continue growing—but at aslower rate than what we’ve seen so far. As theindustry becomes more solidified, larger playersare crowding out some newcomers.
10/15/2015 Subscription Boxes: Are They Worth The Money? Forbes
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To stand out from the competition, Lee says newentrants need to offer cheaper products, àla Dollar Shave Club, or tout a celebrityaffiliation. (Kate Hudson, Food Networkchef Tyler Florence and style guru GiulianaRancic have all jumped on the bandwagon,launching subscription services of their own.)
Even bigbox retailer Target is getting into thegame, incentivizing customers to join itsrelatively new subscription program by offering a5% discount on all purchases, from printer ink tobaby formula. (Just last month, the productassortment was expanded nearly tenfold toapproximately 1,500 items.)
Need paper towels delivered twice a month?Vitamins every other month? The autodeliveryfeature allows customers to personalize theirorders according to their needs, with flexibility tomodify the shipping schedule and quantitieswhenever necessary.
But if you’re looking for a service that does theshopping for you, there’s Stitch Fix, a popularsubscription company that serves as your ownpersonal shopper.
For roughly $65 per item, subscribers receivemonthly clothing deliveries selected for them byprofessional stylists. First you fill out a styleprofile, which helps the company understandyour size, style, shape, budget and lifestyle. Afterchoosing a delivery date, you’ll be charged a $20styling fee that’s applied as a credit towardanything you wind up buying from yourshipment.
Each delivery consists of five clothing items andaccessories—and if you buy all five, you’ll get a25% discount. Keep what you like and returnwhat you don’t by using a prepaid envelope.According to Stitch Fix rep Erin First, they’veshipped hundreds of thousands of “Fixes” toevery state in the U.S. since their 2011 launch.
For the home chef, Blue Apron is anothersubscription giant that, as of last August, deliversroughly 100,000 readytocook meals a month to40 states in the country. (Unfortunately, much ofmiddle America is out of their delivery zone.)
10/15/2015 Subscription Boxes: Are They Worth The Money? Forbes
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Blue Apron supplies fresh, preportionedingredients along with recipe cards, so thatpreparing dinner only takes about 35 minutes.Roasted sweet potato and caramelized onionpizza, kung pao chicken tacos, and whole wheatspaghetti with fiddleheads are among the currentmenu options. Plans start at $9.99 per personper meal.
With so many options to choose from, it’s nowonder customers are flocking to purchase theirown subscriptions. But that’s just half the story.What entices them to stay loyal month aftermonth?
The Psychology Behind SubscriptionBoxes
Beth Hildner, 32, a dental assistant inMiddletown, N. J., subscribes to Birchboxand Julep, a fastgrowing box service forcosmetics, skin care and nail polish.
A satisfied customer, Hildner looks forward toher monthly deliveries with happy anticipation.“That surprise is definitely part of the draw—thatcuriosity of what’s going to come next,” she says.
And that’s just it. Michael McCall, consumerbehavior expert and chair of marketing at IthacaCollege, says part of the subscription box magicis the thrill of wondering what you’ll receive inthe mail each month.
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The rub is that after a couple of rounds of gettingitems you don’t like, you may lose interest,McCall says—but that’s often not enough to getcustomers to call it quits.
He compares monthly subscription box fees togym membership dues: If customers are payingas little as $10 a month, they will perceive it as agood deal—even if there’s not a clear benefit.
Plus, like a gym membership, the hassle ofcanceling is sometimes enough to keep youpaying. While some monthly subscriptionservices like Birchbox and Ipsy (another boxprogram for beauty products) allow customers tocancel their memberships online, others don’tmake it as simple: For example, Julep requiresyou to phone in your cancellation.
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But that’s only a problem if you want to cancel:Many subscribers describe the thrill of gettingitems handpicked for them as reason enough tokeep their memberships.
“The chemical reaction our bodies have whenwe’re excited and waiting for that box eachmonth—not knowing what it is, but knowing it’scoming—creates an adrenaline rush,” saysAmanda Doman, site manager at the IllinoisInstitute for Addiction Recovery. “Whensomething’s being handpicked for someone, it’sfeeding their selfesteem. It makes them feelunique and keeps them continuing to purchase.”
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So before you invest, make sure you investigatethe company’s return policy, and stay on top ofreturning unwanted items—even if it’s a pain.
For example, McCall says consumers are muchless likely to return items that are already openedand in their living rooms, but you can fight thisurge. Ask yourself: Would I have purchased thisitem on my own if it wasn’t mailed directly tome? If the answer is no, return it.
RELATED: Will That Purchase Really Make YouHappier? 3 Questions to Ask Yourself
Are Boxes Really a Good Buy?
Naturally, subscription boxes won’t satisfyeveryone. For Agnieszka Pniewski, a 31yearoldequity operations manager from Brooklyn, themodel actually subtracts from the inpersonshopping experience she enjoys.
She subscribed to Birchbox and Julep for threemonths, but eventually canceled both in favor ofhaving more control over the quantity—andquality—of the products she purchases.
“I like loyalty programs and curated products,which you can also get at brickandmortarstores,” Pniewski says. “For example, at Sephora,I’m more than happy with the level ofpersonalized service I get, which translates to mewanting to purchase more there.”
But if you’re one of the many, many others whoenjoy the thrill (and total convenience) ofsubscription boxes, remember this: The line
10/15/2015 Subscription Boxes: Are They Worth The Money? Forbes
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between “wants” and “needs” can easily becomeblurred. (Does anyone really need a vacation in abox every month?)
Katie Colman, a Certified Financial Planner™and managing partner at Siena Wealth AdvisoryGroup, says shoppers trying to decide whethertheir subscriptions are worth it should askthemselves why they’re utilizing a certainservice. If you’re constantly strapped for timeand don’t always make it to the grocery store fordinner goods, then it might be fun—and makefinancial sense—to enroll in a foodandrecipedelivery program like Blue Apron or Plated.
If time isn’t your issue, Coleman urges you toweigh the overall cost effectiveness of individualservices. Spending $19 a month on a BarkBoxsubscription may seem like a great deal on thesurface, but could you otherwise justify spendingmore than $200 annually on treats, toys andgrooming products for your dog? If not, stepaway from the computer … and make thoseindividual purchases as needed.
But if you can find a subscription service thatsaves both money and time, you’ve hit thejackpot.
“With Subscribe & Save from Amazon, I have arecurring shipment and get 5% off, so it reallysaves me money,” says Lindsay Karr, a 29yearold teacher in Arlington, V.A. “Plus, if you addmore items to your shipment, you get more[discounts].”
Karr has five items in her May shipment,including baby food, toilet paper and other homegoods—all purchased at a discount and with freeshipping. With a sixmonthold baby at home,she says she simply doesn’t see the point inrunning around town from store to store, likelyspending even more money in the process.
Does your subscription sit squarely in the splurgecategory? Coleman says that’s O.K. too—if youcan truly afford it. “Maybe your Birchboxmonthly surprise is your treat, and that’s fine aslong as you’re meeting all your other financialobligations and it’s not impacting your ability tomeet your goals.”
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