Shopper Marketing - March 2016 - 150


Impact of subscriptions
on replenishable CPG
categories.
When we look across a variety of CPG categories,
we see wide variance in subscription penetration of
the online category. Shaving sets the high-water
mark, with 68 percent of the category (by dollars)
sold through subscription. But the penetration
numbers become less significant as you move
down the list. Hair care , for example, has only two
percent of category sales on subscription.
The result is that in some categories, such as
shaving and diapers, the challenges are to bring
offline shoppers online with subscriptions. In other
categories, such as hair care and facial skin care,
the bigger challenge is to get online shoppers to
shift to subscription.

The role of marketing in
subscription businesses
Marketing is the most important element of any
successful subscription businesses.
Amazon
uniquely has the advantage of an enormous
customer base as it tries to shift consumers into
its subscription program. Upstart brands, though,
have to start from scratch. Not only do they have
to create awareness of their brands, but they also
need to get consumers over a reticence to commit
to a product they've never tried in a subscription
program. Social media has been critical for every
successful subscription upstart that we're aware
of. Birchbox created a phenomenon when it
encouraged early customers to post 'unboxing'
videos to YouTube as they opened their monthly
boxes. Dollar Shave Club created lightning with
a very funny viral video. They were both very
good, very lucky, or both; allowing social media to
provide the initial awareness push. Both of these
businesses, though, as they aspire to grow, are
raising capital to support ongoing traditional media
spending. According to iSpot.tv, Dollar Shave Club
now outspends Gillette in television ad spend.

© Copyright Slice Intelligence. 2016. All rights reserved.

The Brand Perspective
So far we've focused on the merchant side of the
equation, but what about brands whose products
are sold through subscription programs? How do
subscriptions affect brands?
The data that we've looked at strongly suggests that
consumers that are on replenishment subscription
for brands tend to exhibit far stronger loyalty
characteristics; notably share of wallet.
From the perspective of brands, discovery-oriented
subscriptions are another tool in their sampling
repertoire.
Slice conducted a study in 2014
looking at Birchbox shoppers spending on beauty
products before and after joining Birchbox. As
one would expect, Birchbox customers do spend
money on Birchbox's marketplace, where they
can buy products whose samples they enjoyed.
More surprisingly, Birchbox subscribers seemed to
increase their spending on presumably competitive
retailers. Spending on Ulta increased by six percent
after Birchbox subscriptions started, and a similar
five percent lift in dollars were on Sephora.

Our take
It is clear that subscriptions have become a
significant force in the ecommerce domain, both
for replenishment and for discovery. While there is
a faddishness about the online subscription space,
and a resultant proliferation of competitors, the fact
remains that subscriptions align the desire of brands
and retailers to lock in customers with a consumer
desire for value, convenience, and exploration.
We expect that a subscription program will soon
be a minimal expectation for most retailers of
replenishable goods - and that retailers will use
those programs to extract promotional dollars from
brands. Further, we expect that subscription boxes
will become the leading channel for distribution
of samples in the health and beauty and grocery
categories.

4


http://www.iSpot.tv

Table of Contents for the Digital Edition of Shopper Marketing - March 2016

Contents
Shopper Marketing - March 2016 - Intro
Shopper Marketing - March 2016 - 1
Shopper Marketing - March 2016 - 2
Shopper Marketing - March 2016 - 3
Shopper Marketing - March 2016 - Contents
Shopper Marketing - March 2016 - 5
Shopper Marketing - March 2016 - 6
Shopper Marketing - March 2016 - 7
Shopper Marketing - March 2016 - 8
Shopper Marketing - March 2016 - 9
Shopper Marketing - March 2016 - 10
Shopper Marketing - March 2016 - 11
Shopper Marketing - March 2016 - 12
Shopper Marketing - March 2016 - 13
Shopper Marketing - March 2016 - 14
Shopper Marketing - March 2016 - 15
Shopper Marketing - March 2016 - 16
Shopper Marketing - March 2016 - 17
Shopper Marketing - March 2016 - 18
Shopper Marketing - March 2016 - 19
Shopper Marketing - March 2016 - 20
Shopper Marketing - March 2016 - 21
Shopper Marketing - March 2016 - 22
Shopper Marketing - March 2016 - 23
Shopper Marketing - March 2016 - 24
Shopper Marketing - March 2016 - 25
Shopper Marketing - March 2016 - 26
Shopper Marketing - March 2016 - 27
Shopper Marketing - March 2016 - 28
Shopper Marketing - March 2016 - 29
Shopper Marketing - March 2016 - 30
Shopper Marketing - March 2016 - 31
Shopper Marketing - March 2016 - 32
Shopper Marketing - March 2016 - 33
Shopper Marketing - March 2016 - 34
Shopper Marketing - March 2016 - 35
Shopper Marketing - March 2016 - 36
Shopper Marketing - March 2016 - 37
Shopper Marketing - March 2016 - 38
Shopper Marketing - March 2016 - 39
Shopper Marketing - March 2016 - 40
Shopper Marketing - March 2016 - 41
Shopper Marketing - March 2016 - 42
Shopper Marketing - March 2016 - 43
Shopper Marketing - March 2016 - 44
Shopper Marketing - March 2016 - 45
Shopper Marketing - March 2016 - 46
Shopper Marketing - March 2016 - 47
Shopper Marketing - March 2016 - 48
Shopper Marketing - March 2016 - 49
Shopper Marketing - March 2016 - 50
Shopper Marketing - March 2016 - 51
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Shopper Marketing - March 2016 - 53
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Shopper Marketing - March 2016 - 55
Shopper Marketing - March 2016 - 56
Shopper Marketing - March 2016 - 57
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