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Novelty Is No Longer the Driving Force Behind the Subscription Box. Here's What Is. Box delivery itself isn't what's thrilling customers. Brands' complete customer focus and personalization is what drives great experiences and innovations.

By Georg Richter

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Subscription retail companies are commonplace these days, and the huge growth in the sector continues. A 2018 report from Hitwise indicates that in April visits to U.S. subscription box websites reached the 40 million mark -- an increase of 890 percent since 2014.

Physical subscriptions are certainly nothing new. A simple web search will reveal that newspapers have been around for hundreds of years. And for decades, people have purchased memberships to magazine, book and music clubs. But the subscription box industry as we know it started in 2010 with the introduction of Birchbox's beauty sample subscription program.

What separates the current iteration of the physical subscription from deliveries of the past is the product curation and true dedication to consumers. When the items in a shipment are personalized specifically for each customer, it helps create a lasting relationship between the brand and its members.

Related: 3 Great Ways to Create an Emotional Bond with Customers

While it's possible that part of the industry's initial growth spurt could be due to the novelty of a box delivery, the complete customer focus that drives great subscription experiences has buoyed the business to its current success and created innovative brands that are leading from the front.

Identifying Subscription Methods

After Birchbox combined product sampling with the convenience of home delivery, the subscription box industry exploded. It's difficult to say exactly how many box services are out there, but a conservative estimate puts the number between 2,000 and 3,000. Subscription boxes tend to fall into four categories: Sample boxes such as Birchbox; replenishment programs such as Dollar Shave Club; specialty deliveries such as Loot Crate or Barkbox; and curated content such as FabFitFun.

Subscription boxes built on the sampling, replenishment and specialty models remain viable, though some initial leaders like Birchbox and Dollar Shave Club have fallen to new competitors like PLAY! by Sephora and Harry's as well as the growth of Amazon's Subscribe and Save. Beauty samples, in particular, continue to hold members' interests, especially when combined with in-store experiences. And there's no denying that the convenience aspect of replenishment programs and the targeted nature of specialty boxes are still attractive.

But the most promising subscription retail models offer curation, exclusivity and personalization. Brands that infuse these elements into their subscriptions develop relationships with customers that go far beyond a great product offering. Curated boxes rely on quizzes and other methods of information-gathering that allow brands to personalize product deliveries, create exclusive products based on the date and use the data to help improve the experience further.

Catering Directly to Consumers

While meal kits and apparel boxes are some of the highest-performing examples of curation in action today, any subscription business can take a page from their books. Follow these three steps to ensure your brand's subscription meets the demands of today's consumers:

1. Find your niche.

Attempting to be the "subscription box for [blank]" is a recipe for mediocrity at the very best. Instead, some of the most successful subscription retail ideas are those that connect with a very niche audience in new ways. Accio! Box is a subscription box with a Harry Potter theme, but that's far from niche. In fact, there are tons of other competitors in the space, as evidenced by this list of six top options.

However, Accio! Box recently set itself apart by demonstrating a commitment to source only products that are 100 percent vegan and certified cruelty-free. The brand also uses delivery packages made from recycled material. The results have been impressive, and Harry Potter fans who champion plant-based diets or decry the testing of products on animals have been given a single, clear choice out of all the options that could have previously filled their subscription box needs. Whether a super niche retailer like this can truly scale is unclear, but scale and size depend on business goals. Use all customer data you have to brainstorm ways you can appeal to your audience with a niche concept like sustainability.

2. Test before you invest.

Dollar Shave Club became famous for its low-budget YouTube videos that went viral and catapulted the brand to then-unparalleled subscription success. Featuring founder Michael Dubin, the commercials were deliberately simple, straightforward and funny, and they appealed to an audience of men who were tired of the slick corporate ads being churned out by other razor companies for broadcast television.

The YouTube commercial was also an excellent way to test what kind of following the brand could hope to achieve without requiring a huge upfront investment. After just three months, the video had already reached 4.75 million views. Since then, that number has risen to an impressive 25 million. The high-performing, well-executed video verified proof of concept and confirmed that the cool, in-your-face messaging worked. Before you fully roll out any new messaging or offering, start small with test videos, posts, or samples. Let your members' reactions dictate whether your campaign or product is ready to move forward at full steam.

Related: How a Subscription-Box Founder is Using Data to Survive -- and Thrive

3. Shift your focus to retention.

Subscription customers are a long-term investment. Thus, it's necessary for retention to receive at least as much focus as acquisition. However, online retailers spend almost 80 percent of digital marketing budgets on acquiring customers, according to Adobe. What they seem to be missing is that it's five times more expensive, according to Forrester Research, to win over a new customer than to keep one you already have.

A retention strategy is especially effective if it involves a customer-centric approach. Make improvements to the overall customer experience through superior customer service, seamless delivery and additional offers and rewards, and your customers will become fans and advocates of your brand. If you haven't already, introduce self-service options on your website and boost your social media presence. Personalizing your deliveries will also ensure a more positive customer experience.

Related: You Too Can Grow a Successful Subscription Company. Here's How.

While the novelty that likely drove the flood of new subscription box offerings between 2010 and 2015 has worn off, direct-to-consumer retail still has plenty of appeal. It does away with an overwhelming number of options in favor of curation, giving customers what they want without forcing them to spend the time and energy to look for it themselves. If your subscription box program includes elements of curation and a genuine focus on getting to know consumers, you'll be on the right path to making your mark in the industry.

Georg Richter

Founder and CEO of OceanX

Georg Richter is founder and CEO of OceanX, which is reinventing the membership economy by transforming customer-brand interactions and providing a powerful engine for subscriptions. Georg specializes in implementing next-generation technologies and innovative technology solutions that transform industries.

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