The subscription economy, where goods are delivered to your door, is the business model du jour. Lovefilm proved the concept when it sold to e-commerce giant Amazon for £200m. Abel & Cole, the organic vegetable box delivery company, posted sales of £46.5m last year, up nearly 30pc on 2011. The subscription business is booming, but how do you make a success of it?
Luxury through the letterbox
Husband and wife team Hollie and Darren Sassienie are the brains behind Sassy Bloom, a baby box delivery business that tailors its products to the age and sex of the baby. The company is only in its launch phase but has already attracted a celebrity following, with reality TV star Kerry Katona, Girls Aloud singer Kimberley Walsh and Coronation Street actor Jack Shepherd all tweeting their support.
Sassy Bloom gives rushed mums a little boost every month, said Ms Sassienie. “We discover and handpick the very best tried-and-tested baby products and deliver them,” she explained. “It’s a stress–free solution.”
The entrepreneurs have forged partnerships with brands including Hipp Organic, Mam, Lasinoh, Baby Einstein, and Tomy to create the widest possible range. “It’s a surprise every month,” said Ms Sassienie. “We try to include products that mums won’t necessarily know about or have already, like banana-flavoured dental wipes for teething babies who don’t want a toothbrush in their mouth!”
The boxes are a luxury item, she added, but the pair have been keen not to price themselves out of the market. “We decided to keep the cost under £30 because she didn’t want to exclude mums who were on maternity leave and have less money coming in,” she said. “At the moment the boxes come in at £22.50 per month with free delivery and given that we’re already seeing hundreds of sign-ups, I think we’ve got the price about right.”
The baby box subscription concept is not a new idea. The model is already established in the US, with companies like Diapers.com turning over $300m (£187m) a year. “We’ve improved on the US model,” said Ms Sassienie. “In the States, everybody gets the same box each month. We are a lot more personalised – we even deliver Babygros with the baby’s name embroidered on the front. And everything you get in your box is tailored to your baby’s exact state of development, from newborn to two years.”
Exclusivity by post
“You would struggle to find the majority of our products on the high street,” said Sarah Dembitz, founder of snack box delivery company Saviour Snacks. “At best you’d need to trawl through four or five different health food shops, which would be tricky.”
Ms Dembitz launched her start-up six months ago to deliver healthy eats all over the UK. Her company is following in the footsteps of Graze, the subscription company founded by Lovefilm’s Graham Bosher, “But unlike Graze our unique selling point is health,” she explained.
Saviour Snacks scans the market for artisan suppliers of healthy food, from olives to seeds, popcorn to biltong. Boxes are delivered weekly, fortnightly or monthly, and are increasingly being bought by big corporates for their staff as a company perk. “We just did a deal with a trading floor and those guys are crazy about the biltong,” laughed Ms Dembitz.
“We also act like a consultant,” she continued. “We go through the nutrition labels carefully to make sure what you’re eating is actually good for you. There are some unscrupulous companies who make ‘health’ products that aren’t healthy. We take care of that legwork for our customers.”
Since inception, Saviour Snacks has been growing 50pc month-on-month. “We are building lasting relationships with our subscribers,” said Ms Dembitz. “It’s not only great in terms of cash flow as this model provides continuous revenue, it also means we have an engaged audience to leverage when we want to launch new products.”
The company is currently diversifying into a wide range of specialist boxes, from gluten-free to vegan, with a raft of other product launches in the pipeline. “And we’ve got a captive audience,” she said.
Power to the people
There are approximately 3.5 billion women on the planet and yet menstrual products remain an embarrassing topic for many people. “We call it the tampon taboo,” says Genevieve Murphy, founder of tampon subscription service Trinkets.
She and co-founder Kate Barry launched their business three years ago. “We’re both from Australia and the feminine hygiene market over there is very mature,” she explained. “We were shocked to find the lack of choice over here in the UK. There were no natural, pure cotton tampons in the supermarkets so we decided to start our own company.”
Trinkets delivers its hypoallergenic, natural tampons – free from chlorine and bleach – to subscribers depending on their individual cycles, every four to six weeks. “It’s a reassuring delivery that helps women manage their periods,” says Ms Murphy.
The discretion element has helped the business to thrive. The boxes are very plain on the outside, and save women’s blushes at the supermarket or chemist’s counter. The convenience of having tampons delivered has also allowed Trinkets to charge a premium for its products. “We’re £3.45 with free delivery,” said Ms Murphy. “You can probably find them for a pound less in a big chain but they can be much more expensive at the corner shop.”
“The boxes are beautifully designed and very feminine inside,” added Ms Murphy. “We really want to treat women with respect, rather than fuelling the perception of periods as something to hide and running adverts with women running around in white spandex.”
JustFab is a high-end fashion delivery business that sends out shoes, bags and denim to three million subscribers across the UK. Fashionistas choose their preferences online: heels or flats; dark colours or light, and the service cherry picks styles each month.
“We give our members the latest trends priced at £35 at the quality of items that retail for £80 or more,” said managing director Caroline Finch.
Serendipity is part of the appeal of JustFab but if subscribers don’t like their new wares, they can return them for nothing. “We offer free shipping both ways and easy returns and exchanges,” she said.
According to Ms Finch, the JustFab model runs circles around the bricks-and-mortar retail industry. “Unlike traditional retailers, we offer our members a personalised shopping experience,” she said. “We show our members how they can wear each item by using style boards with different looks and outfits, videos that show our members how to wear the season’s hottest trends and work with well-known celebrity stylists who help guide our team on which styles are most appropriate for our members’ varying style personalities.”
There are a lot of benefits to the subscription model, added Ms Finch. “It drives more engagement and loyalty with consumers since our members are making a commitment to come back to our site every month to check their boutiques – which means they’re shopping more frequently with us.”
JustFab has a team of fashion consultants on hand to deal with queries and subscriber issues. And rather than use the standard “contact us” form provided by many e-tailers, JustFab encourages its members to phone up and speak to stylists to talk through the kind of products they want to receive.
However, providing this level of service does not come cheap and Ms Finch warns that it takes time to turn a profit: “You need scale to succeed and to make the margins work,” she said. “With a fashion company, you need the right product with the right quality with the right price because in the end, the shopper is going to come back because she liked the product.”
From The Telegraph