2020
9
US Evolving eCommerce: Subscription Services Market Report 2020
2020-12-18T03:01:06+00:00
OX987254
3695
128909
[{"name":"eCommerce","url":"https:\/\/store.mintel.com\/industries\/retail\/ecommerce"}]
Report
en_GB
“The number of different subscription services available is currently outpacing the amount of interested consumers at this point. The subscription market is slated to continue growing, especially as consumers spend…

US Evolving eCommerce: Subscription Services Market Report 2020

£ 3,695 (Excl.Tax)

Report Summary

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Evolving eCommerce: Subscription Services US market including the behaviours, preferences and habits of the consumer.

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What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

There’s a subscription service for just about any product across categories these days, including beauty boxes, meal kits and pet food. The category has exploded in the past decade after a short list of pioneers saw success from subscription-based models, which spurred a flurry of other companies, including retail chains, to launch their own subscription offerings.

Despite the flurry of new entrants in the market, consumer adoption remains relatively low, with only just over a third of consumers currently participating in at least one service. As more people shop online amid COVID-19 and look to save money, adoption should expand naturally. Still, subscription services have significant barriers to overcome to move the needle among nonparticipants, including addressing negative perceptions about the value proposition and “contract” terms with an out clause.

Expert analysis from a specialist in the field

Written by Diana Smith, a leading analyst in the eCommerce sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The number of different subscription services available is currently outpacing the amount of interested consumers at this point. The subscription market is slated to continue growing, especially as consumers spend more time at home amid COVID-19 and see the benefits of having goods delivered to their doorstep. However, they need ample assurance upfront that they can tailor the service to fit their personal preferences and cancel if need be.
Diana Smith
Associate Director – Retail & eCommerce

Table of Contents

  1. Overview

    • What you need to know
    • Key issues covered in this Report
    • Definition
    • COVID-19: market context
    • Economic and other assumptions
  2. Executive Summary

    • Top takeaways
    • Market overview
    • Impact of COVID-19 on eCommerce and subscription services
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on ecommerce and subscription services, October 2020
    • Opportunities and challenges
    • Educate to dispel misperceptions
    • Plan for cancellations
    • Add more customization and flexibility
    • Take more of an omnichannel approach
    • Promote subscription services as gifts
  3. The Market – Key Takeaways

    • eCommerce is winning in the pandemic
    • Subscription services should continue to see growth amid and after the pandemic
    • Subscribers in, subscribers out
    • Subscription services for consumables most popular
    • Opportunity to add more customization
    • Online services can expand offline
  4. Impact of COVID-19 on eCommerce and Subscription Services

      • Figure 2: Short-, medium- and long-term impact of COVID-19 on ecommerce and subscription services, October 2020
    • Lockdown
    • Re-emergence
    • Recovery
      • Figure 3: Total US retail ecommerce sales and forecast, at current prices, 2015-25
    • COVID-19: US context
    • Learnings from the last recession
    • Key metrics
      • Figure 4: Personal consumer expenditures, 2007-Q2 2020
    • Takeaways
  5. Market Landscape

    • Impressive growth in a decade
      • Figure 5: Subscription service participation and interest – any service (net), July 2020
    • Opportunity targets include 35-54 women, singles and low-income families
      • Figure 6: Subscription service participation and interest – any service (net), by select demographics, July 2020
    • No strong preference for automatic replenishment versus online subscription boxes
      • Figure 7: Types of subscription services, July 2020
      • Figure 8: Frequency of receiving service, July 2020
    • A very fluid membership cycle; cancellations common
      • Figure 9: Experience with subscription services, July 2020
  6. Segment Performance

    • Consumables most popular subscription services
      • Figure 10: Subscription service participation and interest, by category, July 2020
      • Figure 11: Subscription service participation and interest – Nets, by category, July 2020
  7. Market Factors

    • Economic and policy-related factors
    • Driving preference and loyalty becomes increasingly important at a time when consumers are pulling back on spending
      • Figure 12: Consumer confidence and unemployment, January-September 2020
    • Opportunity to grow penetration among Hispanic and Black populations; increased personalization is one viable approach
      • Figure 13: Household income distribution by race and Hispanic origin of householder, 2018
    • Demographic factors
    • Gen Zs and Millennials don’t readily offer their loyalty, but they will pay for services they really want and see value in
      • Figure 14: Population, by generation, 2014-24
      • Figure 15: Attitudes toward subscription services, by generation, July 2020
    • Technology factors
    • A rise in online shopping should naturally boost subscription services
      • Figure 16: Shopping distribution – online vs in-store – before and during COVID-19, July 2020
    • Environmental factors
  8. Market Opportunities

    • Give customers more control
      • Figure 17: Attitudes regarding customization of subscription services, by gender and age, July 2020
    • Constantly test-pricing strategies
      • Figure 18: Attitudes regarding discounts for subscription services, July 2020
    • Take more of an omnichannel approach to distribution
  9. Companies and Brands – Key Takeaways

    • Mass retailers get in on the action
    • Expanding target audiences
    • Heading to the store
  10. Competitive Strategies

    • Two biggest retailers capture share of market
    • Amazon
      • Figure 19: Amazon Subscribe & Save
    • Walmart
      • Figure 20: Walmart+ membership program
    • A look at how some of the pioneers are staying relevant
    • Dollar Shave Club
      • Figure 21: DSC exclusive cyber week offer for members
    • Stitch Fix
      • Figure 22: Stitch Fix Shop Your Looks
    • Birchbox
      • Figure 23: Birchbox educational messaging targeted to “everyday” consumer
    • Winc
      • Figure 24: Winc holiday post
      • Figure 25: Winc Facebook post targeting investors
    • The meal kit trend continues
      • Figure 26: Meal kit usage and interest, June 2020
      • Figure 27: Select meal kit service online ads, 2020
    • Spotlight on the leader: Blue Apron
    • Newer entrants try their hand at subscription models
    • Lululemon
      • Figure 28: Lululemon membership email, September 2020
    • Panera Bread
      • Figure 29: Panera Bread MyPanera+ Coffee subscription offer
  11. The Consumer – Key Takeaways

    • Value is in the eye of the subscriber
    • Subscriptions “on my terms”
    • Managing churn is a challenge
    • Majority of nonsubscribers are open to trying a service
    • Gifting is an opportunity area
  12. Consumer Trend Drivers and Subscription Services

    • Value
    • Experiences
    • Technology
    • Surroundings
  13. What Motivates Consumers to Sign Up

    • Sign-ups happen when a consumer perceives value from the service
      • Figure 30: Participation drivers, July 2020
    • Moms more tuned into the benefits
      • Figure 31: Value and select convenience drivers, by parental status, by gender, July 2020
    • Gen Zs and Millennials want to make sure they will like the experience before they sign up
      • Figure 32: Reassurance drivers, by generation, July 2020
  14. What Features Consumers Value

    • Desire for flexibility, choice and a voice
      • Figure 33: Important features, July 2020
      • Figure 34: Stitch Fix email notification about upcoming delivery
    • Older generations most demanding
      • Figure 35: Important features, by generation, July 2020
    • Multicultural customers want to interact with a human
      • Figure 36: Access to customer service, by race and Hispanic origin, July 2020
  15. Why Consumers Cancel

    • Cancellations are a given
    • Price
    • Customization
    • Quality
      • Figure 37: Reasons for canceling, July 2020
      • Figure 38: Reasons for canceling, by age, July 2020
    • Not everyone likes the packaging
      • Figure 39: Cancellation due to packaging concerns, by select demographics, July 2020
      • Figure 40: by Humankind Instagram post about its packaging
  16. Reasons for Not Participating

    • Education needed to address misperceptions
      • Figure 41: Reasons for not using subscription services, July 2020
    • Black consumers and Hispanics likely to see subscriptions as out of reach
      • Figure 42: Value-oriented reasons for not using subscription services, by race and Hispanic origin, July 2020
    • Online-based subscription services may be too limiting for consumers that prefer to shop in stores
      • Figure 43: Preference for in-store shopping, by age, July 2020
      • Figure 44: Likelihood of buying subscription box in a store, by age, July 2020
  17. Attitudes toward Subscription Services

    • High levels of positivity and advocacy
      • Figure 45: Attitudes related to advocacy of subscription services, by generation, July 2020
      • Figure 46: Spice Madam subscription box
      • Figure 47: Allure Beauty Box example
    • Incentives can entice increased usage and satisfaction
      • Figure 48: Value-related attitudes, July 2020
    • Opting out must be easy
      • Figure 49: Attitudes related to returns and cancellations, July 2020
    • Gifting is an opportunity area
      • Figure 50: Gifting incidence, by gender and age, July 2020
  18. Appendix – Data Sources and Abbreviations

    • Data sources
    • Consumer survey data
    • Abbreviations and terms
    • Abbreviations
    • Terms
  19. Appendix – The Market

      • Figure 51: Online home delivery subscription enrollment, April 2016-June 2020

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