The evolution of a subscription service model

I’ve been watching NYC-based Birchbox for a while now: it’s a company founded by 2 smart ladies, and their CTO is Liz Crawford – which is pretty damn cool. But more that that, it’s the business itself that’s fascinating to me: a monthly subscription that sends you a neat box with luxury beauty samples and other sweet deals (like discount coupons to great brands) for an affordable $10/month. A service that actually makes a lot of sense. Their recent acquisition of a similar French service shows that it’s growing and has a lot of potential.


*Image from subscriptionboxes.com, not the actual September package I got

I am so far from your typical makeup junkie: to me the simpler the better, so I use just a few tried-and-true options (Estee lauder foundation, mascara, blush and a Clinique chubby stick). However, I’m always curious to see what my friends use, and if there’s anything that’s cool beyond Allure magazine’s top picks (some of them are just plain silly like Britney Spears fragrance – would anyone over 21 really use it?). Plus I was really intrigued to find out that there is a huge YouTube following of Birchbox, and as a result, it created some celebrities who are reviewers of monthly birchboxes. I had to try it for myself and see what it was all about.

So the first one arrived a couple of weeks ago, in this nice minimalistic packaging. The goodies inside the box included a nail polish (got lots of compliments on the color), awesome argan oil (love the scent), BB cream sample tube (pretty good), a couple of small items that I would use and forget (hair elastic and some weird colorful ziploc bag), and a $25 off coupon for Madewell. The verdict: B+, not bad at all! I already made use of everything (except the ziploc) and was pretty happy with quality and selection. More than that, I was so sure that the quality of stuff would be good, that I also sent another box as a gift to a friend. She didn’t get hers yet, but we were excited about trying stuff together and comparing results.

Looking at other subscription services that exist (and some perished), let’s try to understand what makes one a real success?

  • Magazines
    Probably the oldest service that is still widely used (despite predictions that no one will be subscribing), moving to digital from paper format. Why people like it: consistent delivery of curated content, news on a regular basis. The variety of publication allows consumers to subscribe to those that cater to their interests and hobbies

  • Netflix (and other online video subscriptions, like Hulu)
    Again, convenient delivery of content, with large selection of movies and shows. What I feel is lacking on both is curation of content. It might be hard to cater to all, as some like popular sitcoms and some brainy documentaries. This, however, can be easily addressed with a good recommendation engine that analyses content you liked in the past (exists on Netflix, not perfect)

  • Beer-of-the-month (and other food-item-of-the-month types)
    I think it’s a hard one to pull off. Why? Because after a certain point, it hits a plateue, as your shipments become predictable and less exciting or novel. Beer is beer, in January or October (well, perhaps, stronger in Oktober). It’s always good, but can’t really surprise me much with it.

  • Amazon’s Subscribe and Save
    Convenience, convenience, convenience. Those lucky NYC dwellers who live in buildings with a doorman enjoy the benefits of Amazon Prime and will never run mundance shopping chores again (soap, toothpaste, diapers and such). Not very exciting, but very practical. Wonder if it’s as popular outside of large metro areas. Do people in suburbs enjoy shopping for soap at Walmart?

  • Bluum
    It’s birchbox for moms. Good quality baby stuff sent to your door. Convenient and helpful in navigating new unfamiliar shopping area – baby stuff. Another cool factor – it could adjust to mom’s needs as her kid grows up, and send new items appropriate for kid’s age, staying relevant and useful.

  • Jack White’s fan vault
    Sean is a big fan, and he has a subscription to this very exclusive club. Every so often they will send some interesting items, like rare recordings, posters, tshirts and such. They also give fans early access to concert tickets. This is obviously not for everyone, but it’s really targeted to biggest fans of the artist.

So looks like the “it” factors for subscription services are:

  • Convenience
  • High-value curated content
  • Focusing on your target group and tailoring content to recipients (Madewell coupon was a good one, and shows the knowledge of preferred stores of my demo group)
  • Consistency in delivering satisfaction – keep surprising and delighting
  • Affordable price: you want your subscribers to feel like they get their money worth, plus get some extra goodness
  • Bonus point: packaging. Don’t underestimate the first impression. I now pay lots of attention on my gift wrapping, because great presentation makes even a simple gift seem so much more valuable.

And looks like Birchbox got it all right. I can see it becoming even better as it “learns” what products you liked best and tailoring boxes based on your preferences. Will it continue to grow into something that becomes a new model for a successful subscription service? I’d like to think so.

What other products or services will make a great candidate for a regular subscription?

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