We are a globe filled with online shoppers. And the UK is the world’s third biggest e-commerce market and the world’s second biggest online grocery ordering market. This evolution in shopping behavior has increased the trust and confidence in online ordering and experimentation, giving rise to a new breed of online services: subscriptions. Today, more than a quarter of UK shoppers are signed up to a subscription box, spending more on them than ever before (from £18.49 in 2016 to £56 in 2017), and this is having an impact on their expectations of brands and services.
The subscription e-commerce market has exploded over the past five years, with an increasing number of platforms changing the way we buy and try categories—from razors, wine and whisky, to beauty and groceries. What does this mean for brands trying to keep up with these changing expectations and behaviors?
Research by McKinsey shows that people are subscribing to different offers for different reasons. There is the classic replenishing service that is changing the way we stock up on things. Amazon’s Subscribe & Save or Dollar Shave Club are prime examples of sending out regular stock-ups of a specific product, removing the need to browse and consider different brands, saving us time and money.
The most popular subscription services fall into this category, from Spotify offering us access to the world of music, to Netflix, never leaving us bored at home with a library of films and series. But this category is not only limited to entertainment. There are platforms like JustFab, focusing on fashion, or Kazidomi, a European platform offering organics spanning from food, to beauty, to home. These services are changing the rules of ownership and have proven to be among the most disruptive.
While these categories have distinct differences in their offers and benefits, they all drive a profound change in shopping behavior, one which brands not in this space yet, need to keep up with.
There is an increased need for personalization of services and platforms, learning from and adapting to the likes and dislikes of the user, requiring brands to be flexible and consumer-focused. This can mean knowing when replenishment is needed for different products or curating products that are in line with personal preferences. This creates a new sense of ownership, as shoppers are expecting to influence and customize the product and service they are getting, rather than brands dictating a fixed offer.
But brands still have to do the heavy lifting as shoppers are expecting more convenience than ever. Shoppers expect a subscription experience that learns automatically from a user’s behaviour, adapting its service to their need. This can range from finding the right delivery timing to learning preferred ingredients and flavours for curated boxes. Together, these new expectations form what can be called fluid commerce, meaning customizable offers and services, delivered just at the right time for the shopper’s convenience.
All this requires brands to adapt a new mindset that aims to keep up with changing shopper behavior. From pushing out products, focusing only on the transaction, to becoming diligent, observant and agile, sustaining an ongoing relationship with their shoppers, giving them the best possible personalized experience. Ultimately, shoppers are expecting a great experience, rather than a great subscription.
Subscription services are changing the way shoppers interact with categories
The ongoing growth of subscription services and their users are changing shoppers’ expectations and usage of certain categories. Spotify or Netflix for entertainment, Amazon Subscribe & Save for stock-ups, and GLOSSYBOX for sampling new beauty products.
User data allows for ongoing personalization
As more and more data is being gathered and used, shoppers are starting to expect their data to be used for personalized, tailored experiences, shifting the perceived nature of ownership.
Convenience is king
Although shoppers are involved in personalizing products more than ever, they are still looking for simple, fast, and hassle-free services; and subscription services are cashing in on the speed and convenience they can deliver on.
Brands need to shift the focus from transaction to experience
As subscription services are all about personalization and convenience, brands need to focus in on the shopper experience, ensuring long-term customer retention and, thus, profitability.
Contributed By: Lukas Quittan, Integer London
Image Source: Unsplash