CONSUMER PRODUCT SUBSCRIPTION MODELS - Inspiration for consumer brands from 16 of the most interesting online subscription models January 2020 ...
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CONSUMER PRODUCT SUBSCRIPTION MODELS Inspiration for consumer brands from 16 of the most interesting online subscription models January 2020
CONTENTS
Executive Summary P3
About Practicology & Pattern P4
Amazon Subscribe & Save P5
Beauty Pie P6
Bloom & Wild P7
Dollar Shave Club P8
GoodnessMe Box P9
Gousto P10
Graze P11
Hotel Chocolat P12
HP Instant Ink P13
Ipsy P14
KiwiCo P15
Kong Box P16
Nespresso P17
Nike Adventure Club P18
Sniph P19
Stitch Fix P20
2
EXECUTIVE SUMMARY
Welcome to our report taking an in-depth look at the subscription • Curation: Providing inspiration with an edited selection of products
models that established consumer brands and start-ups have that may be personalised to customers’ tastes;
developed in order to create long-term relationships with consumers. • Replenishment: Providing convenience by automating the ordering
In the following pages we profile 16 subscription models from around of items that customers regularly require.
the world to highlight best practice, and provide inspiration to consumer Some of the examples are trying to excel at meeting one of these aims –
brands who want to create online subscription propositions of their own. such as Amazon’s Subscribe & Save proposition for the replenishment
Monthly subscription boxes have generated buzz in the last couple of aim. Others, such as health snack provider Graze, meet all three of the
years. Brands and retailers are also adding subscription options to their aims to some degree.
existing ecommerce sites.
Research shows that 15% of online shoppers in the USA have signed up Key takeaways
for at least one ecommerce subscription service (McKinsey, 2018). The
number of online subscriptions offered has also proliferated in other Each example provides different inspiration, but there are some clear
markets in the past five years, particularly Europe and Australia. themes from our research that it is worth highlighting.
• The model must support customer acquisition and retention. Long
subscription terms will limit sign-ups, but churn rate is also a crucial
Why subscribe? metric. Discounts for longer subscriptions, and discounts for paying
When analysing the 16 examples we’ve looked at both the proposition in full upfront are both mechanisms to encourage loyalty.
and the business that has introduced the idea. Subscriptions succeed • To meet the replenishment aim, it’s helpful to allow the customer to
where they deliver against one of the three following aims. They are: choose the shipping cycle, or offer the exact amount that’s required
• Access: Providing customers with products they can’t get elsewhere, for a standard cycle, such as Dollar Shave Club with its monthly
or at a cheaper price through subscription; delivery cycle. ►
3
EXECUTIVE SUMMARY
• Ensure your offer stays relevant to subscribers beyond the minimum
time-frame. What’s going to ensure that they renew? Nike’s and About Practicology & Pattern
KiwiCo’s propositions are designed to adapt with the customer.
• Add value for customers who commit to longer subscriptions, or pay Together Practicology and Pattern act as the premier ecommerce
the total cost of the subscription upfront. Create a model that adds partner to global consumer brands.
value for additional commitment, such as GoodnessMe Box has.
• If you have an existing ecommerce site, how could a subscription Practicology is a global digital consultancy with a track record of
model complement this? Amazon’s Subscribe & Save option is one supporting retailers and consumer brands with all types of
that relevant D2C brands could consider adding to their website. ecommerce challenges, including helping them to define and
create online subscription models.
• A subscription model can test new products, or generate feedback
from customers. KiwiCo uses customer feedback for product Pattern is the leading global marketplace expert, acting as the
development, and the brands supplied by GoodnessMe Box want authorised Amazon seller for more than 80 brands across North
their products sampled to generate exposure. America, Mexico, Europe, the Middle East and Australia. We are
• Technology can be both an enabler and a blocker. Ensure systems also an authorised Tmall Trade Partner in China.
don’t limit your ability to create an optimal proposition. Gousto uses
AI to predict demand and HP is dabbling in the Internet of Things. Brands we work with include: Atrium Innovations, Google, Lego,
In conclusion, we’ve found that the best models solve a customer Lipault, LVMH, Pandora, Skechers and Skullcandy. Pattern also
problem and happen to do it with a subscription, rather than the other runs Kong’s subscription offer Kong Box, profiled on P16.
way around. Spotting a customer pain-point or gap in the market should
be the first aspect of any subscription model development. For strategic and operational support with an ecommerce
challenge, please contact us at hello@practicology.com
4
SUBSCRIPTION MODELS: How Subscribe & Save works
The marketplace Amazon offers a subscription
AMAZON option for suitable products that allows users
to select a delivery schedule and receive an up
Replenishment to 15% discount if they receive five or more
products in a single order.
Key takeaways Delivery is free, and Prime members receive an
up to 20% discount products in a couple of key
• Subscription is offered on products categories – nappies and baby food. Extra
discounts are also available for first-time
that customers are likely to want to subscribers on select products.
purchase regularly, with a discount on Eligible products are shown in the Subscribe &
Save Store. Reminder emails are sent before
products for larger order sizes each delivery, so the customer can amend
their order. Orders can be skipped and
• Targets time-poor parents with subscriptions cancelled at any time.
savings on frequently required items –
About the business
such as nappies and baby food
You’ll already know who Amazon is, the behemoth marketplace has circa three
million active sellers in addition to selling product itself. Its free delivery plus content
• Builds on its Amazon Prime offer, and subscription package, Prime, passed the 100 million global subscriber mark in 2018.
is complemented with additional Prime adds value with access to entertainment content and is designed to lower the
barrier to purchase from the marketplace, with free, expedited delivery, so that
developing subscription offers, such Amazon is subscribers first port of call when looking for a product.
as for prescribed medications Amazon is also developing other subscription offers. It acquired PillPack in 2018 to
offer automated replenishment of prescriptions; and just registered the name
Amazon Pharmacy in Australia.
5
SUBSCRIPTION MODELS: How Beauty Pie works
Beauty Pie describes itself as buyers club for
BEAUTY PIE beauty, where members choose a plan – and
pay a monthly membership fee – dependent
Access Curation Replenishment on how much they want to spend each month.
For example, a customer signed up for the £10
monthly membership can buy up to £100 of
Key takeaways product each month at the discounted price. If
they want to buy more they pay a premium for
• Adds value by bringing premium the items over their spend threshold. It’s also
possible to buy products at the premium price
beauty products to consumers at without subscribing.
accessible prices The minimum subscription length is three
months, and there is also a shipping fee per
• The subscription element provides a order. Beauty Pie offers the first month free to
tier of discount on purchases, rather new subscribers.
than specific products being chosen
About the business
for the customer each month Beauty Pie was founded by Marcia Kilgore, a serial entrepreneur in the beauty
category, who also created Bliss Spa, FitFlop and Soap & Glory among other brands.
• Is particularly interesting as its Her goal with Beauty Pie is to disrupt the industry, by giving beauty product lovers
insider access to shop from the world’s 10-20 best beauty labs.
founder has a strong track-record in
Founded in late 2016, the business makes its profits from monthly subscription fees,
the beauty industry and prices products to subscribers to be profit neutral. In comparison, big brands
might charge up to 10 times as much to cover the cost of high-end packaging,
marketing, corporate overheads plus brand and retail margins.
6
SUBSCRIPTION MODELS: How Bloom & Wild works
Online florist Bloom & Wild allows subscribers
BLOOM & WILD to choose between three types of bouquets,
two of which are packaged in a way that they
Access Curation Replenishment can fit through letterboxes, and one that comes
hand-tied so no arrangement is required, all
with free next-day delivery.
Key takeaways
Subscribers can pay up front for subscriptions
• Designed to solve for the problem of of varying lengths to their home or as a gift. A
pay-as-you-go option is also available for
missed deliveries in the traditional deliveries every week, fortnight or month; this
option can be paused or cancelled at any time.
flower delivery model. Boxes are
The price of each bouquet is less for those who
designed to fit through letterboxes to pay in advance and sign up for the longer
ensure delivery is possible even if no subscription lengths. Customers can also
make individual purchases.
one is home; flowers are packed by
About the business
hand with additional packaging to
Bloom & Wild was founded in 2013 in the UK, but has seen demand grow
protect buds substantially in the last year. Revenue surged by 70% in its latest financial year, with
four million packages sent since the business launched, and two million of those
• Strong bias to female customers, with sent in 2019 alone. Around 80% of purchasers are women, and this rises to 90% for
recipients. Mother’s Day is the firm’s busiest one-off event.
the majority of purchasers and The English customers can have deliveries shipped to Ireland, France or Germany as
recipients being women well as the UK, and the business also has localised French and German sites. The
founder Aron wanted to solve the problem of making flowers easier to send, and
spent a lot of time researching letterboxes sizes.
7
SUBSCRIPTION MODELS: How Dollar Shave Club works
Dollar Shave Club sells what it considers to be
DOLLAR SHAVE CLUB the best shaving products on the market, with
the subscription model designed to remove the
Access Replenishment pain-point of buying products that often have
anti-theft protection in stores.
Key takeaways New subscribers are encouraged to choose
one of the brand’s starter sets, that are
• Identified a replenishment pain point tailored to different shaving requirements and
then can set up regular shipments from every
for consumers – razors are often in month to three times a year.
security boxes or tagged – and used a Products from its complementary growing and
oralcare ranges can be added and removed
subscription model to reduce friction from orders. Membership can be cancelled at
any time, and the brand also offers a 30-day
• Grabbed US online market share with no-quibble money back guarantee.
genuinely disruptive model
About the business
• Creates a lot of online content The start-up disrupted the disposable razor market when it was launched in 2012
focused on male health, wellbeing and enjoyed viral marketing success, including a YouTube advert that focused on the
quality of its products. Despite imitators springing up it had grabbed 54% of the US
and lifestyle, to give subscribers a online shaving market by the time it was acquired by Unilever in 2016; an attempt to
take on rival Proctor & Gamble’s Gillette brand. The purchase signalled the beginning
reason to keep coming to its site of a wave of D2C brands being bought by large consumer goods manufacturers.
Dollar Shave Club is still run as a separate company and retains its own brand
identity. It has branched out with grooming products and an oralcare range.
8
How GoodnessMe Box works
SUBSCRIPTION MODELS: GoodnessMe Box is an Australian health food
GOODNESSME BOX subscription service offering 7-10 clean eating
food items each month, as well as recipes and
usage suggestions. Some products in the box
Access Curation are also available to buy from its online store.
Subscriptions are for 3 or 6 months, or
recurring. 3 and 6 month subscriptions are
Key takeaways billed in total upfront, but attract a discount on
the pay-monthly option and also include free
• Sampling model with a second shipping. The six month subscription also
includes a bonus extra box. Gift options are for
revenue stream selling the individual 3, 6 or 12 month subscriptions.
It has branched out with a monthly nut-free
products included in the boxes Kids Box, and a quarterly Beauty Box.
A loyalty scheme earns points that can be
• The discount structure encourages converted into store credit.
new customers to sign-up for a longer
About the business
length of time in return for paying for
GoodnessMe Box describes itself as Australia’s largest health food sampling service,
the full subscription length upfront and was founded by Peta Shulman when she was 25, after a doctor recommended
she cut out processed foods from her diet. She started the business with AU$20,000
of her own money, and turned over more than AU$1m in year one. Five years on the
• Perfecting the web platform was an business has continued to grow and achieved profitability.
obstacle to early growth More than 600 brands have been sampled in the boxes, and the exposure has
increased demand and helped them to get onto the shelves of bigger retailers.
Shulman says her biggest early obstacle to growth was developing an effective
website platform to support the business model.
9
SUBSCRIPTION MODELS: How Gousto works
Gousto offers weekly, fortnightly or monthly
GOUSTO recipe boxes on subscription or as a single
order. Customers choose between a box for a
Access Curation Replenishment couple or a family, and can select two to four
recipes per box. Named day delivery is free,
and specific delivery timeslots are £2.99.
Key takeaways Subscribers can increase or reduce the size of
their order every week before the order cut-off
• Is one of the most successful of many point. Skipping an order and pausing a
subscription are both allowed.
weekly meal/recipe box start-ups Customers select recipes for each order, and if
subscribers don’t choose in time, recipes are
• Profit is not yet its stated short-term chosen for them based on their dietary
motivator, and it has received much preferences. Subscribers also have priority
access to new recipes.
investment to help it reach scale
About the business
• There is flexibility to pause, skip Gousto is the UK’s largest recipe box delivery business, having been founded by
orders and make one-off orders German-born entrepreneur, Timo Boldt – an ex-hedge fund employee – at the age of
just 26. Since then Boldt has raised more than £100 million in funding from a group
rather than force customers to of investors that includes FMCG giant Unilever.
commit to a long subscription With more than 500 employees, Boldt expects to more than double his workforce in
the next couple of years. The business also employs artificial intelligence and
automation in its supply chain as a differentiator from the competition, which allows
it to improve efficiency and trade with close to zero food waste.
10SUBSCRIPTION MODELS: How Graze works
Graze offers twice weekly, weekly or fortnightly
GRAZE deliveries of its snack boxes, which are
designed to fit through letterboxes and
Access Curation Replenishment personalised based on preferences set by each
subscriber. Each snack box has four individual
punnets containing different items.
Key takeaways
Gift vouchers are available for subscriptions
from three to 50 boxes, or customers can gift a
• Pioneered the subscription model for one-off box.
healthy snacks, but has driven growth Subscribers are encouraged to give feedback,
to drive product development for future boxes,
and penetration by selling through its online store and retail channels. The ranges
retail channels available to subscribers in the USA have been
localised to suit American tastes over time.
• Subscribers are encouraged to give
direct feedback on the products they About the business
receive, which drives new product Founded in the UK in 2008, Graze is perhaps the UK’s most successful subscription
start-up. Sold to Unilever for a reported £150m in 2019, the business had already
development and recipe changes branched out into distribution through supermarkets which powered its growth.
Graze’s CMO has said that these retail deals have had no negative impact on its D2C
• Customer data also drives insight into business, as those who have experienced the D2C channel are most likely to go on to
purchase through retail too. It also uses subscribers to get quick feedback on new
longer term shifts in tastes and trends
products and recipes and to spot changes in demand, such as the veggie protein
trend. Graze says it spotted this trend in the US and developed products for the UK
market within six months. 11SUBSCRIPTION MODELS: How Hotel Chocolat works
Premium chocolate brand Hotel Chocolat
HOTEL CHOCOLAT invites customers to join its Tasting Club, which
offers a box of chocolates based on one of five
Access Curation taste profiles delivered monthly with payment
taken monthly.
Key takeaways Subscribers are able to score and provide
feedback on the chocolates that they receive
each month. The chocolates sent are new
• The Tasting Club allows the brand’s recipes that the brand is trialling with a view to
most loyal customers to trial new putting into production and stocking on its
website and in stores.
products and give feedback while Members are able to score the chocolates and
they are still in development, to help provide additional feedback online. The highest
scoring chocolates are also featured in a
the brand decide which to launch in special collection once a year.
its retail stores and website About the business
• Subscribers can submit feedback The UK-based business takes a bean-to-bar approach, with its own cocoa plantation
in St Lucia and products are mostly sold through its own stores and website.
online and the most highly rated Some 55,000 Tasting Club members score the products they receive and Hotel
chocolates produced are included in Chocolat’s founder says the business has weekly sessions to review this data and
determine which products to launch.
an Excellence Collection once a year In its 2019 financial year, revenues hit £133 million with an EBITDA of £20.7m. The
business is focused on international expansion and has begun to open stores in the
USA and Japan in addition to those in its home UK market.
12How HP Instant Ink works
SUBSCRIPTION MODELS: HP allows customers to sign-up for auto-
HP INSTANT INK replenishment of ink cartridges when they own
one of its WiFi-enabled printers, which it’s
claimed can save them up to 70% on ink costs.
Replenishment There are five price-plans available, based on
the number of pages that the customer prints
Key takeaways a month, with additional charges if they go over
their monthly page allowance. There is no
difference in price for printing in colour to
• Utilises the connectivity of its printer black and white.
devices to offer automatic Cartridge deliveries are triggered by the device
automatically telling HP that it is low on ink,
replenishment of ink cartridges when rather than being on a regular monthly
schedule. The monthly fee covers ink, shipping
the device senses it is running low and cartridge recycling, and the plan can be
changed or cancelled whenever they like
• Payments are taken monthly, though without a penalty.
deliveries happen as and when more
About the business
ink is needed
HP is one of the most well-known printer manufacturers in the world. It launched the
Instant Ink programme in 2013 with the promise that it would save customers
• Simple price plans are all based on
money, as well as ensure that they never run out of ink and the old cartridge is
the number of pages printed per recycled.
HP has not released definitive figures for the percentage of printer owners who are
month, rather than ink used signing up for the scheme – it says customer adoption is above 20% where retailers
are promoting the scheme. However, it has said that once they do sign up, the
retention rate is over 90%, and customers become advocates of the scheme. 13SUBSCRIPTION MODELS: How Ipsy works
Beauty sampling service Ipsy offers five or
IPSY more products each month with users able to
greatly personalise the items they receive.
Access Curation New subscribers begin by taking an in-depth
beauty quiz, which asks for key characteristics
such as eye and hair colour, as well brand
Key takeaways preferences and the frequency they would like
different product types or shades of product
• Beauty subscription service that has included in their delivery.
Ipsy allows members to select one of the items
already managed to disrupt its main in their delivery each month, from a
subscription rival Birchbox personalised selection with the rest chosen for
them based on their preferences.
• Allows users to provide a huge Members can cancel at any time.
amount of detail about preferences as
well as characteristics to determine About the business
Ipsy was founded a year after its main competitor Birchbox, but has managed to
the personalised selections received
overtake its rival with a focus on personalisation and the power of influencer
marketing. This is no surprise given that the company was co-founded by one of
• Has very successfully used beauty YouTube’s original beauty influencers, Michelle Phan.
influencers to drive sign-ups Ipsy has more than three million active members compared to Birchbox’s one million
subscribers, and $500m annual revenue. The value of its influencer relationships is
considerable; Ipsy’s influencer earned media value (EMV) was estimated to be worth
$45m in 2019, compared to Birchbox’s $1.5m.
14How KiwiCo works
SUBSCRIPTION MODELS: KiwiCo offers eight activity “crates” with
KIWICO projects for different ages. 3, 6 or 12-month
subscriptions vary from $19.95 to $29.95 a
month, a discount on the cost of buying the
Access Curation crates individually.
Customers can switch between the different
crates during their subscription, and can also
Key takeaways pause their subscription for a month. Gift
subscriptions of varying lengths are also
• Subscriptions remain relevant with available, and buyers can have the first crate
sent to them to gift in person, with subsequent
crates for all age groups crates sent straight to the gift recipient.
Subscribers do not get to pick the exact
• Gift subscriptions are possible for any contents of the crate they receive each month,
length of time, and the boxes can be and receive different projects based on their
crate history and availability.
sent to the gifter or recipient
• Customer feedback drives quick About the business
KiwiCo was founded by Sandra Oh Lin in 2011, whose ecommerce pedigree includes
product development cycles to keep running eBay’s fashion business and launch Director for PayPal Mobile. She spotted
a gap in the market for science, technology, engineering and maths products (STEM)
subscribers hooked while creating craft and science projects for her own children.
• Word-of mouth has kept customer The business shipped four million crates in 2018, with $100m in revenue. It’s been
debt free and profitable for three years, after taking $10m in venture capital in three
acquisition costs down small rounds. The company encourages feedback from parents to drive new product
development, and has a loyal customer base; 25% of sales are to families ordering
more than one crate each month. It relies on word of mouth recommendations, and
Lin says that its customer acquisition costs are low and gross margins improving. 15SUBSCRIPTION MODELS: How Kong Box works
Kong Box provides a monthly subscription box
KONG BOX with dog toys and treats that are tailored based
on your dog’s profile which is created by
Curation Replenishment answering a quiz about the dog, its behaviour
and preferences. The contents of each box is
handpicked, and caters for different sizes of
Key takeaways dog and issues such as a box for dogs who
chew or are easily bored.
• Subscription model for a brand which
Discounts are provided for subscribers the
has traditionally been sold through longer they sign up for. If a customer cancels
before the end of their subscription term, they
retail and marketplace channels
are charged for the savings given on boxes
already sent to them.
• Personalised product selections are
Gift subscriptions can be set up or gift codes
designed for different sized dogs, and purchased so the recipient’s owner can set up
tailored to help dog owners with the profile themselves.
specific behaviours
About the business
• A discount structure encourages US-headquartered Kong creates durable dog toys that are sold around the world. It
was founded by Joe Markham in the 1970s when his dog Fritz was destroying things
customers to sign up for longer terms, with his chewing habit.
but there is flexibility to cancel The Kong Box subscription concept was developed by Pattern, the brand’s authorised
Amazon seller, as a way to build a direct relationship with Kong’s best customers.
Further developments to the site are planned, to allow customisation of orders, and a
box for cats is also on the cards.
16How Nespresso works
SUBSCRIPTION MODELS: The coffee machine and capsule brand has a
NESPRESSO number of subscription offers through its Club,
dependent on whether they already own one of
its branded machines or not.
Access Replenishment New members can receive a coffee machine
from as little as £1, with a one-year
Key takeaways subscription from £18 a month. The
subscription fee is stored in a customer’s
• Best-in-class D2C experience with account for them to choose the coffees that
they want delivered, and accrues if they don’t
subscriptions element that predates place an order.
Subscribers on plans that do not include a
the internet, but has adapted to it, machine can cancel at any time. Subscriber
and has now extended to physical benefits include free events in its boutiques,
and a recycling scheme that allows customers
locations too to drop them off or have capsules collected.
• Uses subscription model to provide a
low-cost way of getting machines into About the business
Nestlé-owned Nespresso was launched to consumers in Switzerland in the 1989 with
customers’ homes exclusive and personalised services offered through its Nespresso Club. Customer
acquisition was exclusively through customer recommendation. It launched its first
• Recommendations from friends and website in 1996, and has allowed direct online ordering from 1998.
family drives customer acquisition Nespresso came joint first in Practicology’s 2019 benchmarking study of 100 direct-
to-consumer websites due to added value provided by nespresso.com.
Nespresso says that around 50% of new Club members have experienced the brand
through family or friends before they sign up.
17How Nike Adventure Club works
SUBSCRIPTION MODELS: Sportwear giant Nike got into the subscription
NIKE game in 2019 with this subscription model to
provide kids with Nike and Converse footwear.
Customers can choose from a delivery
Access Replenishment schedule from four times a year up to once a
month, and can be cancelled at any time.
There are discounts per order for signing up for
Key takeaways a longer period.
Delivery is free. If the shoes don’t fit, or the
• Supports Nike’s stated business aim of child doesn’t like them, then exchanges are
also free.
growing the percentage of revenue Nike has also considered the environmental
from its D2C channels impact of its products, and sends a prepaid
post bag to subscribers twice a year so that old
shoes can be recycled or donated to charity
• Capitalises on kids’ feet growing depending on their condition.
quickly with new shoes being a
About the business
regular purchase
Nike came joint first with Nespresso in our 2019 study of direct-to-consumer
websites. This subscription model shows how serious it is in innovating to drive sales
• Also helps customers get rid of old through its D2C channels; and also supports its aim of focusing on product and
shoes that kids have grown out of in experience to increase revenue and margins. It complements the product
personalisation offered on its website and in its Nike Town stores.
an environmentally-friendly manner Kids footwear is a key category for the business, with back-to-school sales driving its
highest revenue quarter. If this model proves successful we would expect Nike to look
at subscription models for other customer segments to increase purchase frequency
and/or lifetime value.
18SUBSCRIPTION MODELS: How Sniph works
Perfume subscription service Sniph has been
SNIPH designed to solve the problem of spending a
lot of money on a premium bottle of scent that
the customer decides that they don’t like, or
Access Curation
gets bored of.
Members receive an 8ml bottle of scent each
Key takeaways month that fits into the dispenser they receive
upon signing up; and can select from several
• Curated fragrance service that fragrance profiles, for men, women or unisex. A
provides access to scents from artisan scent quiz helps new members decide on the
best profile. Full-size bottles from previous
perfume houses around the world collections can be bought from its online store.
Members can change their scent profile, pause
• Designed so subscribers can build a or cancel their subscription at any point. Digital
giftcards for a 3, 6 or 12 month subscriptions
“scent wardrobe” over time, at a
are also offered.
much lower cost than if they were
buying full-size bottles of the high-
About the business
Swedish-headquartered Sniph has members in more than 30 countries. Led by two
end fragrances offered scent ‘noses’ Lisa Kjellqvist and Tara Derakshan, it launched in the UK in September
2017. Support has come from investment by a group of Swedish investors including
• Bespoke bottles and a dispenser allow Martin Lorentzon, who previously founded Spotify.
2018 revenue stood at $0.5m, and the business said that in May 2019 paying
it to deliver scent in small amounts subscriber numbers were 300% up year-on-year.
It sources fragrances from Swedish distributors or the perfume houses themselves,
and say that they are investing in data-driven product development. 19How Stitch Fix works
SUBSCRIPTION MODELS: Online styling service Stitch Fix offers curated
STITCH FIX clothing deliveries for men, women and
children on a one-off basis, or with an
automated delivery schedule. Users pay a $20
Access Curation styling fee per delivery, and clothing is hand
selected by personal stylists taking the
customer’s size and taste into consideration.
Key takeaways Users are also encouraged to give their stylist
notes on what type of items they would like.
• This highly personalised fashion The styling fee is credited towards items that
the customer decides to keep, and both the
curation service is designed to match delivery and returns are free.
time-poor, choice-rich customers with Stitch Fix does not describe the automatic
delivery option as a subscription, as it wants to
items that suit their personal style make it clear that the customer can stop
deliveries at any time. Delivery options vary
using a mix of AI and expert stylists from every 2-3 weeks, to every 3 months.
• The site makes it clear that About the business
customers are not obliged to sign-up Stitch Fix’s founder shipped her first order in 2011 while still attending Harvard
University, with the aim of mixing styling expertise with proprietary algorithms to help
for fixed-term subscriptions customers find clothes they love.
Fast-forward nine years and there are more than 3.2 million customers who received
• Offers family accounts with multiple at least one box in the preceding 12 months. It has a repeat order rate of 88% and is
estimating revenue of $1.9 billion in its 2020 financial year.
user profiles
The CEO has credited its data science capabilities as the reason for growth, as this
drives the algorithm that helps finds styles and brands that customers want to keep.
20Thanks for downloading our report. More
ecommerce research and insight can be found
at www.practicology.com
For more information on how we could support
you in developing or optimising a subscription
model - or assist with other ecommerce
challenges - please contact us at
hello@practicology.com
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