Several multinational FMCG companies, including Nestlé, Procter & Gamble and Unilever, are pursuing an online subscription model for some of their products, despite evidence that automatic delivery has not worked for some of their rivals.
They are drawn to online subscription services because of the opportunities for stable revenues, lower delivery costs, valuable consumer data and the prospect of bypassing retailers, giving them more control over pricing and promotions.
According to Reuters, which spoke to several FMCG executives and analysts for its report, Swiss FMCG giant Nestlé recently launched a subscription service for nutritional drinks in Japan and expanded its ReadyRefresh online bottled water service in the US.
A Nestlé executive confirmed that the company also plans to expand its Tails.com subscription pet food from the UK to continental Europe and is conducting a pilot in France for a possible launch this year.
Meanwhile, Unilever, which already operates a Dollar Shave Club subscription razor service, will launch its Skinsei skincare brand in the US this week, allowing subscribers to gain access to “personalised” skincare.
Valentina Ciobanu, Unilever’s brand vice president of skincare, told Reuters that the company wants to make its subscriptions more flexible because that is what consumers demand. “We don’t force you to subscribe at the beginning,” she said.
Procter & Gamble is also a participant in the growing consumer trend and its Gillette on-demand razor subscription service recently expanded to Canada where subscribers can text when they want their next shipment.
However, some industry experts told Reuters that direct subscription to FMCG companies is still in its infancy and the question is whether it will take off or remain a niche market.
“For now it’s early starters,” said Bernard Meunier, head of Nestlé’s Purina Petcare business in Europe, Middle East and North Africa. “The question mark is how long will it take to become more mass, and I think nobody has the answer to that question.”
Subscription services certainly haven’t worked for some major firms. Mondelez International, for example, suspended its Oreo Cookie Club and is finding it difficult to deliver mass market snacks at an affordable rate.
General Mills also ended its Nibblr subscription snack enterprise in 2015, while plans by Kellogg for a similar business came to nothing.
Sourced from Reuters; additional content by WARC staff