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Alexandra Biesada

Out of the Box Commerce

by Alexandra Biesada | Dun & Bradstreet Editor

June 29, 2015 | No Comments »

Birchbox_FlickrCC-angiesix_8678669340_2cc98ea900_o_1100px-02What do razor blades, beauty products, wine, and pet toys have in common? All of these products — and many more — are available in “subscription boxes” ordered online and delivered to your door every month (or so, varying by company).

Dollar Shave Club (DSC) may be the best known of the lot, due in large part to a hilarious YouTube video that went viral in 2012 and sent sales soaring. The Venice, California-based startup will deliver blades to your door each month for less than $10. The razor blade delivery service boasts 1.7 million subscribers and annual sales of $65 million last year (up from $4 million its first year out).

With an expanding product list that includes hair care products and flushable wet wipes for men, DSC’s founder Michael Dubin (who starred in the breakout video) told FORTUNE his company is on track to top $120 million in sales this year. While its value-priced blades have apparently found a loyal following of men (and women) who balk at spending $25 on a four-pack of blades from Gillette or Schick, the success of its newer products remains to be seen.

Judging from the proliferation of products sold by subscription, the subscription commerce, or “subcom,” business model is a popular one. BuzzFeed recently published a list entitled “20 Fantastic Subscription Boxes Everyone Needs Right Now” that includes Birchbox (beauty products), BarkBox (stuff for dogs), BroBox (“awesome stuff for bros!”), and Club W (think fruit-of-the-month club for wine). The list goes on. Indeed, the website “My Subscription Addiction” lists more than 100 such clubs, including the Poop Bag Club, a monthly subscription box service for dog owners. (Do they pick up too?)

How-to site Subscription Commerce Insider counts 185 companies in the fast-growing subcom market: the most popular categories being fashion, beauty samples, organic foods, eco-friendly products, and kids’ crafts and activities. Some of them, including Dollar Shave Club, have been successful attracting venture capital (albeit mostly modest amounts). Fashion-focused subcom companies are among those attracting the most investment. They include JustFab ($109 million), BeachMint ($73.5 million), and The Honest Company, a seller of natural products ($27 million).

Take away the Internet and social media and these businesses aren’t all that different from Fruit of the Month Club, a pioneer in the subscription business that’s been in business for more than 75 years, according to the Harry & David website. What’s changed is our expectation that we’ll find everything we need (and a lot we don’t) online — from socks to scripture to sex toys — with just a mouse click. Door-to-door convenience as well as a recurring revenue stream, order predictability, low startup and marketing costs (relative to physical retail), and technology are driving the subcom industry’s growth. Companies, like Cratejoy, are springing up to help aspiring e-commerce entrepreneurs create their own subscription platforms and host the sites.

“Given that a vast range of products can potentially be delivered by subscription, there’s no obvious limit to the size of the subscription commerce industry,” according to Subscription Commerce Insider. As the Postal Service says: If it fits, it ships.

Alexandra Biesada shops everyday, whether she wants to or not, and pines for the days when it was strictly a recreational activity. She has covered the retail beat for Hoover’s since 2001. Follow her on Twitter.

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Photo by Flickr user Angie Six, used here under a Creative Commons license.

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