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Subscription business: Yay or Nay?

“What a brilliant idea Cosset is!” is something I get to hear often. As a founder of Cosset, a period subscription box for women, I am obviously in love with the idea and it is a great boost to my ego when I hear that. But my mind quickly gives me a reality check reminding me of the challenges I face. 🙂  When we launched the subscription service this year in May, the first few weeks were exhilarating. The influencers we connected with spoke about how they loved our offerings. Eventually the novelty seemed to have faded and none of the marketing hacks we tried seemed to work. I was convinced that these things take time and one needs to have a lot of patience but it turned out I had burned more resources than what I had planned to.

Which makes me wonder, is it something that I am doing wrong or is the market still new in India for subscription based services? But subscription as a revenue model has been around for a long time. Generations of families have depended on essentials such as the milk, newspaper, bread and eggs being delivered daily to their doorstep. Well in this case, customers knew what to expect every time. They eventually got used to the comfort of the service and were therefore willing to pay for it. Every single day, the subscriber got the said brand of newspaper or the decided quantity of milk packets. There was no surprise element in this. The new age subscription box services are enticing the customers with a mystery gift item in each box where the subscriber doesn’t know what she is getting. To be honest, the feel-good factor in the surprise element is short-lived.

Recently I ordered the 3 month Flintobox, an activity subscription for kids, for my son. I was mighty impressed with the innovative toys and activities in each box. The quality of their toys is remarkable and the monthly themes are a great way to teach a certain topic. The first box that arrived piqued my son’s curiosity and he showed off everything he made to all and sundry. For the second box the excitement lasted a week. And when the third one arrived, he showed no urgency in opening it. I could tell his interest had worn off and that I needed to stop the subscription for a while before I resumed again. There was an underlying lesson for me with respect to Cosset. If customers don’t see enough value in the monthly offerings, churn is bound to happen. Reaching out to new customers every month is a herculean task.

subscriptionbox

Is this the fate of subscription box services in India? Subscription box services are cropping up in every space possible- there are snacks subscription boxes that aim to provide healthy snacking options to office going people, there are pet boxes which not only supply treats and toys but also have started manufacturing their own dog food to supplement the boxes.

Dixit Chopra, co-founder of Ptara a monthly fashion subscription service based out of Mumbai says that the subscription market is premature in India. Another major challenge they are trying to overcome is the reverse logistics involved in renting out apparels on a weekly basis. Due to RBI guidelines of the two-step authentication made mandatory for credit card payments, subscription boxes charge an upfront fee for a minimum time of three or six months. The prospect of paying a hefty sum for something that they are not going to receive immediately makes customers slightly uncomfortable. Multiple makeup subscription boxes are making it big in the women’s fashion and beauty sector. Their core strategy is to bring international luxury cosmetic brands closer to the consumer by providing samples of products. But how long they can sustain on samples when they scale up is something they will have to figure out soon. After finding the right market fit for products some have now diversified into manufacturing their own line of cosmetics products. Brands like Ustraa that are into men’s grooming products sell products off the shelf at their stores but also have subscription plans on their online stores.

Recently, Unilever acquired U.S. based Dollar Shave Club, a men’s shaving and grooming products’ subscription service for $1 billion.  The main reason behind this acquisition is the relationship Dollar Shave Club had built with men in a very short time, something that big brands fail to achieve in years. While Dollar Shave Club has a subscriber base of 2 million, Birchbox a beauty and makeup subscription box in the US is just above 1 million subscribers. So what is it that makes subscription boxes more acceptable in the US than here in India? I think the Indian consumer isn’t yet ready to pay extra for convenience. Secondly, one time deals and discounts seem to work like magic on the customer than subscriptions.

It is too early to tell whether subscription box service is set to take off in India but if and when it does the market space is enormous. The urban youth that are the target group for most of these services are riding high on the consumerism wave. There is potential in the idea but the timing needs to be right too. So if you’re planning to launch a subscription service, here are some things you may want to consider before you start

  1. Find a niche: It can be a product or target group or both. Singh Styled a subscription box of grooming products for Sikh gentlemen is a perfect example.
  2. Solve a problem: Are you going to provide something that the customer cannot otherwise easily find?
  3. Stay away from samples: Your customer deserves full or mid-sized products, because that is what they are paying for. Also as mentioned before, samples won’t work when you scale.
  4. Make it customisable: What one customer wants may not be something another even likes. For e.g. with Cosset, I started out with only sanitary napkins but eventually had to add tampons and panty liners too.
  5. Listen to your customer: Take feedback, work on it, and deliver. Repeat the cycle till you’ve achieved your goal.

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2 Comments

  1. Why should we look west for solution to the problem that not exist in India. Find a one that solve our solution in our way.

    Just check the no of magazine we subscribe in India to the no of magazine Indian buy from the shop nearby. I see my wife buy magazine every fortnight in the name of food recipe and all, but if i had made her to subscribe she would be least interested.

  2. Depends on the line of business. Leisure and entertainment see good traction in subscription business. Kitty Parties is perfect example of offline subscription that women eagerly wait for. Gym, Spa, Disco, Pubs or traditional spiritual events have thrived on this model only. Charity and donation happens on the same lines.

    I believe the product/service on offer need to be appealing as per the target audience, i.e. youngsters like adventure, surprise, older one like comfort so on.

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