The subscription market will be worth £1bn by 2022, according to a new report from the Royal Mail.
The UK Subscription Box Boom Report says the rise of subscription boxes has been driven by start-ups, thanks to relatively low barriers to entry. Now brands such as Gillette and Sephora are hoping to move into the market, following in the footsteps of smaller companies such as Dollar Shave Club, Graze [pictured] – now both bought by Unilever – and Birchbox.
Ninety per cent of subscription businesses win sales from abroad, says the report, with popular markets including Ireland and France. One of the biggest challenges for subscription box providers, however, lies in keeping customers engaged and reducing churn through cancellations. Successful approaches to this include brand magazines and personalisation.
Joseph Robinson, consulting director at GlobalData, said: “Spurred on by the growth of mobile devices, the subscription retail segment has moved on from a past focus on magazines and newspapers to embrace everything from recipe food kits to shaving gear and self-care. While still in its infancy, the category is now in a phase of growth, with major global brands such as HelloFresh, Harry’s, Birchbox, and DollarShave Club increasing their efforts at expansion. At the same time, homegrown start-ups such as Cornerstone are greatly exceeding their own expectations for their subscriber base, while established subscription brands, such as Graze, have also found favour overseas. GlobalData forecasts that by 2022, the UK market will almost have doubled in size to £1bn.”
A Royal Mail spokesperson said: “Businesses across the UK understand the significant growth opportunities that subscription services can deliver. The market is growing at a phenomenal rate. Future success will hinge on overcoming the key barriers to the take-up of subscription services whilst keeping subscribers engaged.”
Image courtesy of Graze