Subscription-based retail offers some great advantages, not least of which is a regular monthly income and the ability to build a loyal customer base. But being able to service those customers and keep them excited about your products each and every month is one of the biggest challenges these online retailers face.
In the past year, Birchbox’s U.S traffic alone has more than doubled from 111,917 monthly visitors in February 2013 to 334,357 in February 2014. This indicates that initial visitors are returning each month, and these visitors are also talking about the site amongst their social networks which is drawing in even more new visitors monthly.
So Birchbox has clearly found a good balance between providing a compelling subscription service to new customers and intriguing existing customers enough to continue their subscriptions as well. What’s more, the Birchbox subscription model does this via sending product samples to its subscription members, rather than fully-fledged merchandise (this means Birchbox can offer a subscription pricing of around $10 per month, but risks customer dissatisfaction if the samples seem a little light).
In the past, retailers needed a fairly large amount of capital in order to create their business: leasing a site; paying for initial merchandise; printing and distributing promotional materials; paying staff; and purchasing equipment like cash registers and shelving. The internet and cloud-based services have reduced these initial market entry costs, giving rise to the lean business model.
A lean model starts with a minimum viable product (MVP) and tries to learn and pre-empt customer needs based on the market reaction to this initial offering (see diagram at right, from infographic by imimpact). With this sort of bootstrapping approach, you are testing how to build customer loyalty and provide quality products with an actual audience of end users who are already getting some benefits from your product or service offering.
That’s how Birchbox built their business. Speaking with tech website Mashable, Co-Founder Katia Beauchamp explained that at first, the startup team dreamt big around how they wanted to use online retail to change the way women shop. But that was too daunting a business goal to get started working on. Beauchamp told Mashable: “We said, ‘We’re going to take a small version of our vision and launch it with the small amount of money that we have and see if people like us.’ And that really empowered us and helped us see the minimum viable product for us, and that was such an important way for us to feel comfortable personally with taking a leap of faith and to really get our brand and our customers excited.”
In news reporting and blogging, the main formula used for writing articles is the inverted pyramid. In tradition newspaper circles, it is often said “Don’t bury the lede.” The idea is that readers could move on to the next article at any time, so it is crucial to give them the most important information straight up, offering more detailed information later for those who want to dig a little deeper into an issue.
You can see how Birchbox has used the inverted pyramid approach on their home page:
(Note: Left-hand image sourced from Anytown College)
In a similar way to how AutoParts Warehouse uses their masthead, Birchbox makes sure all of the information you need is included in the header menu rows of their website:
To start offering their subscription service, the Birchbox founders wrote to a range of cosmetics suppliers and discussed their idea. They told the suppliers of their intention to create a sample box service and offered to share their data findings. They approached the suppliers by making it clear this was an idea they wanted to test in the market, and that — if successful — it would create a qualified set of market leads who were interested in testing the suppliers’ products.
Since Birchbox have been able to build these relationships with suppliers, they are now able to leverage those relationships further by providing exclusive products in their store. (This is a little similar to how Cherrybrook have been able to build supplier relationships with a couple of industry leaders in the dog show and dog grooming niche to become an exclusive sales channel for highly reputable brands in that niche.)
While this may not be available to newer online retailers who are yet to build a strong relationship with a supplier, it doesn’t hurt to occasionally ask if there are over-stocked items that could be made available to your customers in tandem with the next subscription box deliveries.
Here are two other websites that do use Magento. You can see how they have a similar template layout, with menu on the left and space for an opening paragraph of text and then a grid layout of products, on the right:
Using a drop shipping service can be a difficult starting point when beginning to offer a subscription service. Drop shipping needs a certain amount of monthly sales to scale effectively for the subscription commerce model. And one of the key selling points of offering a subscription service is achieved through consistent branding. Birchbox for example, sends their boxes with a printed card listing each sample item included in the box and with instructions on how to enjoy each item.
Roger Fuentes provides a Quora question and answer comment on Birchbox’s drop shipping model. He presumes the online retailer does use a 3PL supplier and provides a demonstration of the costs that are incurred:
Fuentes also says that “Most 3PLs will require some kind of monthly minimum order (~$2,000 per month in total costs)”.
In addition to the customer profiles that subscribers build, Birchbox reviews their overall site analytics to identify what products and items their visitors are most interested in. From this data, Birchbox has been able to create content such as “top trends” catalog pages.
In reviews of Birchbox on sites like My Subscription Addiction, one of the most loved features of the Birchbox experience is the generous rewards scheme that is offered loyal customers. Shoppers gain points from referring friends, and personal referrals are one of the most effective ways of generating new customers in both online and offline retail. In addition, they reward customers that use social media to share their Birchbox subscription purchases. For example, an active video-blogging (vlogging) community has risen up, with customers often videoing their reaction to a new Birchbox delivery and posting it on youtube. This sort of user-generated content is invaluable to Birchbox when showing suppliers how their customers are engaging with the suppliers’ products, but is also the sort of viral, community led media engagement that cannot be bought, but that has a powerful customer multiplier effect.
Birchbox also uses this wealth of data to repackage their content in ways that encourage more browsing. While search options and latest deals are important web functions to include to make your site accessible and allow visitors to quickly navigate to the products they will purchase, online stores must also provide a rewarding and entertaining aspect that encourages visitors to browse, even if they do not have a specific product purchase in mind. Birchbox has created content sections to encourage site visitors to explore the product catalog at their own leisure. Some sections — like the Top 10 lists for product categories and the top trends sections — use social proof and trending data as a way to encourage visitors to ‘keep up’ with other shoppers. Other sections have an interactive element that helps visitors navigate and browse without knowing specifically what they want. For example, a store section encourages visitors to choose their ‘beauty style’ (classic, trendy, low-maintenance, or adventurous) in order to surface specific product options best suited to their tastes.
Birchbox is providing that there is a demand for subscription box online retail. Whether it be by offering samples — like the Birchbox model — or a curated range of ‘discovery’ products that encourage subscribers to continue shopping online, there are many opportunities to build a loyal customer base and to strengthen relationships with suppliers. Starting small and building a service your customers will love, engaging with your subscribers on social media, and strengthening the reasons why subscribers should explore more of your store are three of the most important eCommerce techniques that Birchbox have mastered through their subscription offering. Can you build a similar model for your subscription retail offering? Share your experiences with us in the comments below.