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Subscription boxes are ripe for growth in Australia

The Subscription box market in Australia may no longer be in its infancy with signs it's set to significantly expand.

image credit: bellabox Australia

“It seems there is very little we cannot have delivered to our doors in a surprise-like box, as the industry has ballooned well beyond clothing and razors to delivering everything from dog treats to toys, plants, and even crystals, directly to consumers.” Greg Petro, Forbes

Renowned for its strong subscription market, the US provides some indication of how Australian consumers might respond to an expanded and increasingly sophisticated subscription box market.

According to Gary Mortimer, an associate professor from QUT Business School, “the subscription-box market in the US has grown by about 100 per cent over the past decade and is to be worth about $2.5 billion annually, and there are more and more Australian businesses and brands getting involved.” (ABC news article)

With the widely-reported surge in subscriptions due to the COVID19 pandemic and the community stuck at home, particularly media and food subscriptions (isubscribe’s article can be found here), the box market is ripe for major growth with a consumer environment markedly changed in its favour.

As people are required to respond to COVID19 outbreaks and flexible work arrangements are normalised, they will be spending more time at home. The appeal of products that arrive to your door via automated or prepaid payments is shaping up to be a big positive. In addition, the recent surge in subscriptions means that the foundation is set for more products to flourish. Once a person has one subscription they are more likely to buy another, appreciating the benefits, typically the cost, convenience and ‘surprise and delight’ of a subscription already.

Global subscription platform behemoth Zuroa Vice President and General Manager of Asia Pacific, Iman Ghodosi, stated in a recent report, “We often see that significant events like this pandemic accelerate underlying trends, and we believe one of those trends is the modern global economy shifting towards digital services and ‘subscription models’. The same report also highlighted the propensity of consumers to keep some of their newly formed pandemic shopping habits.

Then there’s the psychology of the subscription box. One of the prevailing dynamics behind consumers’ interest in subscription boxes has been identified as ‘reward uncertainty’ i.e. the importance of the surprise (and hopefully delight). And in recent times, the notion of ‘self care’ and not feeling guilty about buying something for you.

Around 2015, subscription boxes on isubscribe were overwhelmingly bought by individuals, over 90% of sales. However in 2018 with an expanded product range, the trend dramatically changed. Since then it’s been close to a 50/50 split between subscription boxes being bought as gifts and for oneself.

Isubscribe has been selling subscription boxes for a number of years but experienced a significant spike in 2018 when the business put resources into expanding its product range, achieving an increase in sales volume of 140%.

The categories experiencing the strongest success on isubscribe are beauty and food and drink subscription boxes with leaders the well established Bellabox and Nudie Korean Sheet face masks. Newcomer to the site BeautifullyWell is already performing very well. Beanhunter coffee subscription is the number one food and drink subscription and a consistent top 5 subscription box bestseller the past 4 years. Clothing, health and most significantly, kids subscription boxes are the burgeoning categories.

Isubscribe has experienced a 50% increase in sales of kids subscription boxes just in the past year and the category has grown 52% as a proportion of total subscription box sales. The product range is growing as boxes differentiate by age and intention, with current market leaders My Creative Box, ReWILD your CHILD, CreativKits and Peeky Me.

There are a plethora of fashion and garment specific subscription products and services available around the world, famously Stitch Fix, the Trunk Club, Le Tote, Rent the Runway and many more. Major fashion subscription products are yet to really take flight in Australia but highly specific garment subscriptions are hitting the spot. isubscribe sells Sockgaim, Sock Daily, Sock It Up and GetSocked! in the sock sub-category alone!

Lastly, there’s the burgeoning sector of what are coined ‘replenishment’ subscriptions that are not ‘surprise an delight’ boxes but similarly packaged up. The above-mentioned clothing essentials blur into this category. A ‘replenishment’ subscription saves you time and delivers you the satisfaction of a new-age way of maintaining everyday, household products, at an affordable price, and in an increasingly personalised way, either by volume, frequency or product mix to suit your needs. Where the ‘replenishment’ subscription box category is developing its edge is with its branding. Creators are designing a cool brand and story for your everyday essentials. Leading Australian examples include Toothcrush toothbrush subscriptions, Junni tampon and pad subscriptions and Bondi Wash’s household soap subscriptions.

The subscription model benefits business because of the predicable revenue and because the business develops a direct relationship with the customer that affords valuable product knowledge and an opportunity to build loyalty.

The opportunity for major and independent retailers and creators to further develop subscription box products is clear in Australia.

Hunter Drinan, Managing Director, isubscribe said, “isubscribe is buoyed by the ingenuity already in the market place in Australia. The potential for subscription boxes and products to develop creatively across so many product ranges is a great prospect for our business.”

 

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