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Marketing route in subscription boxes

News, 07 April 2015

NEW YORK: The explosion of subscription-box sales in the US has opened up what is effectively a new marketing channel for brands in certain markets.

Beauty brands, for example, have noted the success of ventures such as Birchbox and Glossybox, which deliver beautifully packaged boxes of curated product samples every month to subscribers.

The idea behind these was to "leverage the subscription model to be part of the product discovery process," according to Birchbox founder Hayley Barna. She had observed that more women were buying cosmetics online and missing out on the experience of browsing at a beauty counter.

Now beauty brands are looking to supply the likes of Birchbox and its many imitators with premium samples or full-size products, in the hope of gaining wider traction, whether through online reviews or pictures posted on sites like Instagram.

The subscription box idea is relatively new. Birchbox was established in 2010 and one industry observer suggests the market has been growing at 200% a year since 2011. Amir Elaguizy, founder of Cratejoy, a platform that helps entrepreneurs to set up subscription businesses, estimates there are now around 10,000 subscriptions on the market.

He explained to Fast Company that these covered a huge range of businesses, many with rather more modest aspirations than an outfit like Birchbox. He related how one operator on Cratejoy simply sells granola for $20 to 50 subscribers, which covers her payments for rent, car and student loan.

"It allows people who could not otherwise run a business the opportunity to do so," he said. "That's the real story when it comes to subscriptions; it's all not about the Birchboxes of the world."

Barna believes, however, that subscription-based companies are "the future of product discovery and shopping online".

And within her own product area, the psychology of buyers is a potent factor, as Marshal Cohen, chief industry analyst at market research group NPD, outlined.

"This business is about the art of giving to yourself," he said. "Millennial consumers, in particular, love the idea of self-indulgence, and subscription companies really understand this."

Data sourced from Fast Company; additional content by Warc staff