Whether you’ve bought a subscription box or not, you’ve likely heard of two big players in the space: Birchbox and Dollar Shave Club.
The former, launched in 2010, sends a box full of makeup and beauty product samples to customers each month, while the latter sends razors and shaving supplies. Both have raised hundreds of millions in VC funding, and last year, Unilever acquired Dollar Shave Club for $1 billion.
They both essentially carved a new market out of the concept of recurring delivery of a niche product. Now, whether it’s apparel, dog treats, or meal components, there’s a subscription box business to deliver those products regularly to your door.
But clearly, all is not well in the land of subscription boxes. The market is saturated. Venture capital in the space has dropped off dramatically, and Birchbox has had at least two rounds of layoffs.
At Quid, we wanted to take a closer look at subscription boxes in both news and funding data, to see how this trendy space is changing.
Subscription boxes focused on apparel, styling services, and interior design dominate the public conversation, which we see in news data between May 2016-May 2017.
Then we mapped the top companies mentioned in the data, and Unilever's acquisition of Dollar Shave Club dominates. But interestingly, traditional brick-and-mortar retailer Nordstrom lands at third in the list — mainly due to the success of its high-end styling service, Trunk Club.
As Walmart and other brick-and-mortar giants gobble up hip online brands, will we see a trend toward other large retailers acquiring niche boxes?
Next we mapped the top individuals in the market.
Michael Dubin is the CEO of Dollar Shave Club and Katia Beauchamp is CEO of Birchbox. Kate Hudson is founder of Fabletics. But Stacie Vaughan runs the lifestyle blog Simply Stacie, and Michelle Phan is an ex-YouTube personality who focuses on make-up demonstration.
Gaining social traction
In Quid, we can also see which stories about subscription boxes are gaining the most traction online. The most interesting find? A women-focused blog community, HelloGiggles, ran with this headline: "There's a monthly ‘Gilmore Girls’ subscription box, and please take all our money." The story was only published once, but shared more than 25,730 times. This specific article was the most shared across the entire conversation.
The second-most-shared article also comes from HelloGiggles, targeting “witchy goddesses” — a Goddess Provisions box catering to women looking to “connect with our divine feminine and grow our spiritual practices.” The article was shared 16,932 times.
The popularity of such stories, combined with the idea’s general traction among Millennials, suggests we could see a crop of new boxes catering that demographic and their interests.
Another company with big social traction: Stitch Fix, a clothing subscription service that uses stylists and data science to make picks. The service disclosed record sales of $730 million for its 2016 fiscal year.
Funding for subscription boxes
We ran a second analysis on the companies in this industry and their financing, filtering to include a field of consumer-focused subscription boxes.
From the data, investment in subscription boxes appears to be tapering off. The industry became quickly saturated between 2014-2015, with the largest tally of total investments and highest dollar amounts invested happening in those years.
In 2016, investment amounts dropped by two thirds, while the number of investments remained relatively high. This tells us investors are still interested, but being much more cautious.
In the heatmap below, you can see significant growth in investments within food and beverage subscription boxes, with a CAGR (Compound Annual Growth Rate) of 146.5%, but we’re also seeing a reduction in apparel-focused subscription boxes, at a -66.4% CAGR.
Subscription Meal Services (95.8% CAGR) and Animal products (85.1% CAGR) are second and third in growing investments.
So what’s next in subscription boxes? A savvy entrepreneur would likely tailor any new subscription box to a Millennial crowd, and one that played on some aspect of pop culture. Other notable trends: niche box products focused on healthy activities, food, or pet supplies. Perhaps the next big subscription box will combine them all: wine and chocolate for the young mom, a yoga mat or a water bottle, plus treats for the dog.
The above represents a summary of our findings about subscription boxes. To see more, please contact firstname.lastname@example.org.
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