As a consumer, we are living at a pretty cool time. New online companies are popping up on what seems to be a weekly basis that are competing for our hard earned dollar. Many of these companies are backed by venture capitalist money and are constantly trying to get a solid read on what the business is worth. That said, it can be difficult to predict revenue on a monthly basis, sales could fluctuate wildly based on weather, economic conditions, or even fashion trends. How can a business stabilize sales a bit, the subscription model. Over the last few years, companies offerings subscriptions have exploded. Whether it is the wine of the month club, to Birchbox, PopSugar, MeUndies, Dollar Shave Club, or even Bark Box for your dog, this is a fast growing segment of business, and the thought process makes too much sense.
Let’s take MeUndies for example. The company was started in 2012 and was basically just selling men’s boxer briefs. As a man, I can say with confidence that we don’t spend all too much time thinking about our underwear I heard an advertisement for the company on a podcast six months ago, and thought I would check out the website. It was very sleek, and basically suckered me in to trying them out and I purchased one pair for $24 (including shipping), which is quite a pretty penny for a pair of underwear. After I received them, I thought they were quite comfortable, and thought, why not, and signed up for a subscription. Now I receive a new pair with a different design once a month at 33% discount. Its good for me with the discount, but also creates the idea of a continuous revenue stream for the company.
Its also funny to see how invested the consumer gets with these subscription products. For a birthday present, my cousin received a six month subscription to PopSugar. I had heard of the company, but didn’t know much about it. For roughly $40 per month, she receives a box that is said to valued at over $100. I happened to be at her home when she received hers this month and you would have thought the UPS driver was Santa Claus himself. There was make up, a hair band, some strange honey mustard, a bingo set and more. All things that you are not sure that you wanted, but the opportunity to try out some new things. She said to me it was like having your birthday once a month, which as a business, what more could you want for your customer?
If you would told me two years ago that I would have a subscription for $20 boxers, I would have laughed out loud, but I think these subscription companies are truly up to something. The key is to find something that the consumer needs and makes them feel comfortable about it on a monthly business. Come to think about it, that sounds a lot like the home warranty business!!