Understanding Subscription Ecommerce
You must be aware of ‘Subscription’ as a concept connected to newspapers and magazines. You take a weekly/monthly/yearly subscription to a magazine/paper of your choice by paying a set yearly fee.
The basic concept when applied to Ecommerce works in the same way. Only the operating space changes from offline to online and of course application of ‘subscription’ changes with the category of online retail. The objective of this business model is to:
- Engage the customers
- Build a loyalty program
- Build long term relationship with the customer
- Make retention rates affordable
- High conversion rates
Companies Offering Subscription Boxes in India
Though fairly popular in the West, the Indian market is yet to completely explore this space. However there are few players such as:
- Flintobox which features monthly toy box for kids keeping in mind child development.
- Bakebox delivers a box of baked goodies every month in Delhi and NCR
- Mumbai based, The Gourmet Box allows you to subscribe for world cuisine inspired gourmet food & ingredients box.
- Fab Bag brings to you beauty and grooming products for men & women monthly.
All the above listed players are catering to niche market and offer curated products with an element of surprise attached. Customers love the suspense and thrill of finding something new each month. It offers a new experience to shoppers who don’t mind to get a pre-assembled hamper instead of selecting on their own and getting overwhelmed by the available options. And so far they have hit the nail on the head.
For instance Bakebox scouts for best baker every month, which is then delivered to its subscribers for Rs. 1000. The customized festive boxes like the Christmas’sy Bake Box acts as a great hassle free gift. Jennifer Duthie, founder of Bakebox explained to Yourstory why she chose subscription business model, “I was really excited by the idea of subscription commerce and the element of exclusivity that it brings.”
FabBag handpicks 3 luxury makeup products tailored for each member and charges approximately Rs. 1500 for 3 months. It is a feasible option for those who want to try multiple global brands. Kaushik Mukherjee, co-founder of FabBag stated, “The venture required us to resolve two things- to provide beauty products to our members at a good value for their money, and to enable marketing, brand building and constructive feedback to the brands we partner with.”
The January Box of The Gourmet Box with a price tag of Rs. 1250 is Mexican food whereas in November it was Oriental! What more, it comes with a recipe idea. Great In an interview to Economic times, Himanshi Vora founder of the company said, “Supermarkets today are filled with a dizzying assortment of products and most people don’t know what to do with most of them. Curating is a way of letting customers know what is out there in the market and exposing them to something new.”
Flintobox’s January theme is Mad Scientist and next month it is turn for Space Adventure, all for Rs. 1095 per month. Quite aptly they earned the tag of ‘Coolest Start-up’ in 2014. While discussing the fears and vision about selling ‘development toys’, Co-founder Arunprasad Durairaj shared with Business Today, “When we started, we had our fears, but from the feedback we got from the first box, we were clear this is what we wanted to do.”
Other players include BigBasket’s Romantic Packages, Avishkar Box and Small Brown Box.
Indian Online Shopping Biggies Adopting With a Twist
Typical Subscription Ecommerce concept is what is explained above, i.e. sign-up and get pre-decided products delivered every month. But Flipkart introduced ‘subscription’ inspired advantage to its customers, albeit with a twist.
Around mid last year Flipkart launched ‘Flipkart First’ service for its customers. For a subscription fee of Rs. 500 per year, shoppers get free shipping on all orders, two months replacement policy instead of the standard policy, place in customer support priority list and one day guaranteed delivery minus any charge if they sign up for this Premium Subscription Service.
Amazon has been doing this for years but in the US. They are yet to start this advantage service in India. It acts more like a loyalty program but with products like appliances, apparels, electronics, fashion accessories etc, it is difficult to adapt the typical subscription model.
Will it Work in India?
So far the existing players have explored the niche section of retail such as kids’ toys, gourmet food and International cosmetics. This falls under the ‘Discovery’ ‘Mystery’ or ‘Sampling’ model.
Agreed people can’t subscribe for clothes, books, accessories and electronics without selecting themselves. But there are more categories which are waiting to be discovered.
Online grocery is one such segment, which can work under the ‘Replenishment Subscription Model’ that focuses on regularly consumed products. People need fruits, vegetables, toiletries, home care products, grains & pulses and other home supplies on a regular basis. And most households have a set budget & list of things that they buy irrespective of price inflation. This serves as a great opportunity for new players who want to enter this phase of ecommerce.
Other categories that it can possibly work for are curated footwear, innerwear, and personal hygiene products. Another way to go is to introduce ‘Discover New Products Box’ tab on online shopping sites and offer it for a subscription fee. Aditi Samel says, “I am game for an apparel subscription box, specifically for pants and tops as an experiment, provided they get the size & fit right and throw in some quirky prints & brands.”
With easy revenue forecasting, less uncertainty, fixed customers and low inventory maintenance cost, Subscription Ecommerce has a great potential. It still is relatively new in India, but creative Entrepreneurs and Innovators can make it the next big thing of Indian Ecommerce Industry.
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