They are the latest craze in e-commerce: boxes of various types of food, beauty and personal care items delivered right to the customer’s door. Learning more about this trend can help you to get a handle on the direction that e-commerce is going in the near future.

More About Subscription Boxes

There are three basic types of subscription services: replenishment, curation and access. Replenishment subscriptions give consumers a way to regularly schedule the delivery of products such as razors, diapers, vitamins or beauty products. Curation subscriptions, common in categories such as apparel, are designed to be personalized and to surprise and delight the consumer. Finally, access subscriptions give customers lower prices or special members-only benefits on their products of choice.

The Numbers Tell the Story

Did you know that there are over 2,000 subscription box types to choose from? Retailers with household names such as Walmart, Macy’s, Amazon and Starbucks are recognizing how lucrative this fad has become and have incorporated it into their business plans as well.

The Old and the New

Although subscription boxes might seem revolutionary, they are simply the latest incarnation of an ongoing phenomenon. It started with getting newspapers and magazines brought to your door and grew to food delivery and eventually even items such as records and CDs.

Then along came e-commerce, the marriage of business and modern technology. In 2010, Birchbox became the first successful e-commerce subscription box. Over the course of just one year, its popularity skyrocketed, ballooning by 189 percent in less than three years to a jaw-dropping 800,000 members.

The Typical Subscription Box Customer

There are exceptions to every rule, but the typical subscription box customer is a woman in her early forties. Far from poor, she earns an average of $78,436 per year. Most likely, she will purchase a beauty-related box.

Some Clouds on the Horizon?

In spite of its astounding success over the past few years, all is not totally rosy in the e-commerce subscription box world. The price can alienate many potential customers, and it is difficult to lower costs because of the need for customizing and special packaging. When manufacturers do offer deep discounts, they are frequently unable to make a profit, thereby making the business unsustainable over time.

Solving these issues isn’t easy, but entrepreneurs are putting their creative powers to work. Many are going the extra mile to decorate and brand their packaging and products to make them special and unique. Others are exploring automated packaging technologies to enhance the efficiency of their production and product distribution.

Packaging and Social Media

Sites such as Facebook, Instagram and Snapchat have become integral contributors to the success of many e-commerce businesses, and subscription box companies are no exception. YouTube, for instance, is teeming with videos in which people describe their purchases and unbox them in the most theatrical way possible. A beauty or baby-care box manufacturer can capitalize on this trend by making the packaging as unique and beautiful as the products it contains.

Retaining Customers Over Time

An e-commerce structure that requires buyers to commit to an ongoing subscription doesn’t always work. People can become bored over time or can simply decide to spend their money elsewhere unless the companies continue to engage them. That means providing tangible benefits that will motivate buyers to keep paying up each month. For replenishment subscriptions, cost savings can inspire consumers’ loyalty; curated and access subscription buyers often cite personalization, value and convenience.

Regardless of the subscription type, however, all buyers demand a high-quality, superlative experience. In short, if it becomes too inconvenient or costly, many will simply go back to buying what they want when they need it.

According to McKinsey & Company, more than one-third of those who sign on to receive e-commerce subscription services cancel before three months have elapsed. If these businesses are to succeed in the long run, they will need to come up with ways to lower their churn rates and make their offerings more appealing over time.

In spite of the bumps in the road, subscription services are proving to be a revolutionary way for people to not only refill the supplies of the things they use regularly but also to experience new and different products personalized just for them. These services offer a time- and money-saving way for today’s harried customers to shop and often save money at the same time. This model is bound to succeed as long as companies continue to give buyers the customized, high-quality experience that attracted them to subscription services in the first place.