The adoption of subscription services has surged in the past year, increasing from 65% in 2023 to 73% in 2024. Notably, the industry is not only gaining new users but also retaining them as active participants. There remains room for growth, as 15% of online shoppers have yet to subscribe to any service. Overall, online shoppers generally have a favorable view of subscriptions, but misconceptions about cost, quality, and flexibility remain barriers that need to be addressed to fully realize the potential of subscription services.
Price will always be a crucial factor in driving product purchases or trials. Subscription services must clearly communicate the savings compared to single purchases. However, price alone won’t suffice to encourage trials or retain subscribers. Companies need to provide consumers with control and flexibility in how they use the service. Additionally, subscription services have become a platform for unique products and smaller suppliers to gain visibility. The excitement of discovering new items enhances the appeal of subscription memberships, attracting interest especially from Gen Z, Millennials, parents, and multicultural shoppers.
This report looks at the following areas:
- Consumer participation in subscription services
- Types of service and categories of products consumers are experienced with or interested in
- A look at the resistant consumer: category non-participation and barriers to subscription use
- The impact of inflation on consumer behavior and subscription services
- Motivations to subscription service participation
- Subscription features that interest online shoppers
- Behaviors and attitudes toward subscription services, including gifting, preferences and concerns
Subscription services have grown, with potential for more users. Clear cost savings, user control, and hyper-personalization can boost performance further.
Vince DiGirolamo, Director, North America Reports
Market Definitions
This Report examines usage and perceptions of online subscription services and automatic replenishment services across key categories (including beauty, food and drink, apparel, household products). Business models vary and are defined in this Report as follows:
- Online replenishment service for specific products: a recurring service model which enables consumers to automate the purchase of specific products such as pet food or razor blades (eg Amazon Subscribe & Save, Dollar Shave Club)
- Curated box/assortment: a subscription service in which consumers pay a recurring fee to receive a pre-assembled collection of products based on their preferences or style (eg Birchbox, StitchFix)
- Membership subscription: a subscription service in which consumers pay a recurring fee for membership to access and select products on a recurring basis (eg Thrive Market, Fabletics)
- Meal kit subscription: a subscription service in which consumers pay a monthly fee to receive prepared meals or ingredients for curated recipes to be prepared at home (eg Blue Apron, Hello Fresh)
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EXECUTIVE SUMMARY
- What you need to know
- What consumers want & why
- Market predictions
- Opportunities
- Engage older shoppers with personalized healthcare
- Graph 1: non-participants that would consider purchase, by category and age, 2024
- Omnichannel presence required
- Graph 2: attitudes toward subscription services in-store, 2024
- Incorporate tech into all aspects of subscription market
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MARKET DYNAMICS
- Market context
- Market drivers
- The US expanded by 3% in Q2 2024
- Graph 3: quarterly real GDP growth, 2020-24
- Annual inflation sits at 2.5% as of August, the lowest since March 2021
- Graph 4: headline CPI and core CPI, 2021-24
- Unemployment slightly ticked down in August
- Graph 5: unemployment rate, 2019-24
- Consumer sentiment rebounds after a number of months on the slide
- Graph 6: consumer sentiment index, 2022-24
- Over 40% of consumers have seen their financial situations change for the better in the past year
- Graph 7: change in financial situation over the past 12 months, 2024
- Households' growth in finances has primarily been driven by salary gains
- Graph 8: income growth over the past 12 months, by change in financial situation, 2024
- Households' outlooks on their personal finances remains bullish
- Graph 9: income growth in the past 12 months, by financial outlook, 2024
- Graph 10: opinions on financial future, 2024
- Subscription services have appeal regardless of financial status
- Graph 11: experience with subscription services, by financial status, 2024
- Younger consumers drive the future of subscription services
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CONSUMER INSIGHTS
- Consumer fast facts
- Fast facts
- Fast facts continued
- Subscription service users
- Majority of online shoppers have a subscriptions service
- Graph 12: experience with subscription services, 2024
- Subscription services participation has grown in the last year
- Graph 13: subscription services participation, 2024 vs 2023
- Younger generations, parents and multicultural shoppers embrace subscription services
- Graph 14: subscription services participation, by key demographics, 2024
- Types of subscription services
- Majority use online replenishment services, but curated subscriptions have strong appeal
- Graph 15: types of subscription services, 2024
- Younger adults are the most engaged with curated options, while older generations tap replenishment services
- Graph 16: types of subscription services, by generation, 2024
- Hispanic consumers over-index in membership subscriptions
- Graph 17: types of subscription services, by race/Hispanic origin, 2024
- Curated boxes attract parents
- Graph 18: types of subscription services, by parental status, 2024
- The competition in grocery membership plans continues to grow
- Graph 19: paid membership programs, 2024
- Participation by category
- Subscription services have widespread engagement among online shoppers
- Graph 20: participation, by category, 2024
- Current subscriber participation far exceeds previous subscriber engagement
- Graph 21: participation, by category – previous vs current, 2024
- Current subscribers show strongest engagement with food products
- Graph 22: current subscriber participation by product type, 2024
- Younger generations have strong engagement across categories, with most significant differential in apparel subscriptions
- Graph 23: participation by category, by generation, 2024
- Apparel attracts the multicultural consumer
- Graph 24: participation by category, by race/Hispanic origin, 2024
- Parents demonstrate strong engagement across categories
- Graph 25: participation by category, by parental status, 2024
- The resistant consumer
- A quarter of online shoppers have not engaged in subscription services
- Graph 26: non-participation, by category, 2024
- Non-participants remain steadfast in eschewing apparel subscriptions
- Graph 27: non-participation, by category – potentials vs abstainers, 2024
- Products targeting specific demographics have strongest non-participation
- Graph 28: non-participation, by product type, 2024
- Shoppers prefer to purchase items as needed
- Graph 29: barriers to using subscription services, 2024
- Millennials' hesitation with subscription services stems from quality concerns
- Graph 30: barriers to using subscription services, by generation, 2024
- Subscription service motivators
- Affordability is an important motivator to earn new subscribers
- Graph 31: subscription service motivators, 2024
- Gen Xers want to save money, while Millennials like to try new things
- Graph 32: subscription service motivators, by generation, 2024
- Shopper interest in subscription features
- Exclusive perks and discounted rates for longevity contracts yield strongest interest among online shoppers
- Graph 33: interest in subscription service features, 2024
- Gen Zs and Millennials want to leverage subscriptions when shopping in-store
- Graph 34: interest in subscription service features, by generation, 2024
- Parents value flexibility to shop in-store and donate products
- Graph 35: interest in subscription service features, by parental status, 2024
- Attitudes toward subscription services
- Subscription services thrive on convenience
- Graph 36: attitudes toward subscription services, 2024
- Younger generations and parents use subscriptions to find new products
- Demographics share positive attitudes about subscription service convenience and product discovery
- Graph 37: attitudes toward subscription services, by parental status, 2024
- Graph 38: attitudes toward subscription services, by generation, 2024
- Multicultural shoppers believe subscription services save money
- Graph 39: attitudes toward subscription services, by race/Hispanic origin, 2024
- Subscription services as gifts
- Subscription services provide a positive gifting opportunity because they are enjoyable to unpack
- Graph 40: attitudes toward subscription services as gifts, 2024
- Gen Zs, Millennials and parents are most likely to embrace subscription services as gifts
- Graph 41: attitudes toward subscription services as gifts, by generation, 2024
- Graph 42: attitudes toward subscription services as gifts, by parental status, 2024
- Gifting among multicultural shoppers represents opportunity
- Graph 43: attitudes toward subscription services as gifts, by race/Hispanic origin, 2024
- Preferences and concerns about subscription services
- Shoppers like flexibility and personalization
- Graph 44: preferences and concerns about subscription services, 2024
- Unique brands can attract younger generations to subscription services
- Graph 45: preferences and concerns about subscription services, by generation, 2024
- Attract the multicultural consumer with personalized service and unique brands
- Graph 46: preferences and concerns about subscription services, by race/Hispanic origin, 2024
- Tap in-store promotions to teach parents about subscription services
- Graph 47: preferences and concerns about subscription services, by parental status, 2024
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INNOVATION AND MARKETING STRATEGIES
- Launch activity and innovation
- Amazon and Target expand membership opportunities
- Wellness-inspired subscriptions focusing on mental health and self-care
- Curated boxes supporting the journey to mental wellness
- Promoting wellness through self-care subscriptions
- Globally inspired subscriptions give consumers access to unique products
- Home decor subscriptions embrace cultural fusion
- Subscriptions based on cultural lifestyle aspirations
- Family inspired subscriptions offer copious opportunity
- Educational supplements to help parents of young children
- Helping parents navigate the awkward adolescent years
- Marketing and advertising
- FabFitFun collaborates with various partners to feature both well-known and emerging products
- Digital media plays a crucial role in generating interest and reaching potential subscribers
- Blueland expands beyond DTC to reach new users
- Accessibility is tantamount to success
- Food and beverage subscriptions continue to diversify and specialize to attract new subscribers…
- …but must clearly define brand positioning and target audience for optimal success
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APPENDIX
- Market definition
- Consumer research questions
- Consumer research methodology
- Generations
- Abbreviations and terms
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