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Subscriptions: Opportunity or threat?

Thomas Cooper, CEO of Pantri shares a view of subscription services and why they pose a threat to retailers.

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The following guest article has been written for InternetRetailing by Thomas Cooper, ceo of Pantri. Pantri is a smart kitchen platform providing intelligent grocery subscriptions to users through their app, conversation services such as Facebook Messenger and Google Assistant, and Internet of Things appliances – enabling the repetitive essentials to be purchased automatically. Pantri launches in the UK this summer.


www.pantri.net
www.linkedin.com/in/tomfrompantri

 

 

The world appears to have gone subscription mad. I can now lease a car for a few years and just add fuel, or receive my evening meals – pre-prepped all for a monthly fee.


The great thing about subscriptions is that we don’t have to worry about the repetitive, monotonous things that we consume week in, week out – freeing up time by spending less time in places such as the supermarket (or none at all).


In some instances, this makes sense. For example, in my house, we’ll have a basket of around 10 meals that we’ll eat all the time – with the occasional new recipe thrown in at the weekend. This works out great for meal kits, as we can select our menu, receive the delivery and then eat with minimal preparation.


Amazon, of course, offers a large quantity of its own products at a discount through “Subscribe and Save” meaning that you can get everything from teabags to doggy poop bags on a monthly schedule.


This isn’t limited to the big companies either. Taylor St Coffee – an artisanal coffee roaster in London – sends out parcels which will fit through a letterbox whilst ecommerce platforms such as Shopify and WooCommerce enable small operators to cheaply and efficiently set up subscription plans for their customers.


Over time, the user forms a convenient habit that inadvertently locks them into shopping with you every month.


But for certain items, subscriptions are difficult.


For example, I’ll regularly consume a tin of Heinz Tomato Soup in the winter and need a tanker sized supply of toddler suntan lotion at certain periods of the summer.


This requires a degree of intelligence akin to having your own personal shopper – something that fully understands your preferences and interprets your environmental context (such as holidays and weather). At some point in the distant future, the sci-fi buffs among us will tell you, we’ll have our very own HAL 9000 (without the authoritarian streak) or C-3PO to do just that.


REPLENISHING CONSUMABLES

But whilst this might seem a distant dream, consumers are already starting to hand over the purchase of more difficult to predict replenishables to clever bits of hardware.


Don’t believe me? Ask your friends if they have an HP printer using Instant Ink? If you aren’t familiar – an HP WiFi printer now automatically orders ink when it gets low. The consumer just pays a monthly fee direct to HP based on how many pages they expect to print each month.


These printers are the first in a new breed of consumer electronics known as internet of things devices. If you believe most of the market forecasts – the next 10 years will see the majority of the devices that we interact with become connected.


We’re already seeing this elsewhere, with items such as Philips Hue light bulbs that enable your whole house to be automated for a few hundred pounds and smartwatches that track your sleep patterns and alert you to check out an iffy heart rate (Google “Apple Watch Saved Lives” for more).


But next, we’re about to see devices enter the home that are going to overshadow the impact that these early gadgets have had thus far.


To understand how this world gets built out, we need to first revisit Amazon. On April Fool’s Day 2015, Amazon launched the Amazon Dash Button – a connected button which when pressed re-orders a pre-designated item. Due to the date of launch, there was a degree of confusion as to whether the device was a joke. But they were the ones laughing as by mid 2016 – reports circulated that the buttons were creating over 4 orders per minute. Although no further stats have been announced, it’s safe to assume that things went vertical from thereon in.


I’ve met many people who use them regularly for specific items, such as the receptionist of my office building who has one to re-order Tassimo coffee machine pods.


The hardware buttons have recently been superseded with digital alternatives on the app and in the screen version of Alexa, but they bought about a new way of replenishing with devices.
The programme behind the buttons known as ‘Amazon Dash Replenishment’ is still alive and well.

 

Today it hooks up to a growing range of connected devices, from IoT dishwashers to smart storage jars, with the likes of B/S/H (Bosch, Siemens, Gaggenau & Neff) and Samsung having a growing range of connected kitchen and laundry appliances hooked up to the service.


The former has declared that every new appliance that they sell in 2021 will be connectivity enabled. I follow the appliance market closely and can see a whole host of connected devices from other manufacturers coming out a few years after.


From a technological point of view it now means that a dishwasher or washing machine can report each cycle which in turn means that detergent usage can be interpreted. From a user perspective, it means that they can hand over the purchasing of a boring item like dishwasher tablets to their device.


Bosch and Siemens have done just that – with automatic replenishment services in Germany rolling out with the likes of online retailer Otto fulfilling on the service and Reckitt Benckiser deploying Finish 365 tablet delivery direct from an automatic appliance order.


In the growing world of startups, everything from connected kitchen roll holders to dog bowls are starting to provide exactly the same functionality for their respective consumables too.


As artificial intelligence starts to use camera technology inside fridges and ovens however, we’ll see those regular meals tracked and automatically replenished along with the 70% of our weekly shopping basket. This is great for the user since it frees up the time spent buying these things to do something else.


From a retail standpoint though, the interesting thing is that small brands can completely bypass the retailer and sell direct. The big CPG brands have done the same making everything from Nescafe to baby milk available through their own online store and fulfilment.


Avid readers of InternetRetailing will be all too aware of the advancements in logistics resulting in lower priced, faster parcel delivery services. This plays directly into the hands of such outlets.

 

This is great for direct to consumer grocery initiatives. Up until this point they’ve had a fundamental flaw in that you probably don’t want to visit 20 different websites to do the weekly shop. But by handing off the task to machines, the issue disappears.


The question is, where do the supermarkets sit in this new world? The likelihood is that the consumer will start to hand more items off to subscriptions and devices. This will result in single item deliveries for a while – a world that we already accept thanks to Amazon.


In a world where a delivery platform like Deliveroo can pick up a parcel from your local butchers why would a public increasingly adopting localism consider consuming from the big box store?
As a brand or manufacturer, the question is why not use your existing wholesale warehouse to ship to the customer direct and collect the retail margin instead?

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