The subscription lifestyle opportunity: Create direct relationships with customers

Have you ever opened your door and wondered: “What is in the package that just arrived?” Not since the early days of Netflix, when those red envelopes containing DVDs arrived in the mail, have so many consumers been confronted with a huge question mark at their doorstop.

This shopper phenomenon has been caused by an explosion in digitally enabled subscriptions for nearly every imaginable FMCG and Direct to Consumer category, combined with the popularity of Amazon Prime Subscribe and Save.

How is your company tackling the subscription economy? Do you know how the subscription lifestyle is impacting shopper journeys in your category?

Perhaps your team is already experimenting with a direct-to-consumer offer, or maybe you’re in the early stages of mapping out your subscription strategy.

Either way, it’s important to understand exactly how subscriptions are shifting consumer behavior and perceptions.

Read on for our latest insights on the ubiquity of the subscription lifestyle and five issues your team will want to address to succeed in this channel.

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TLDR

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When new shopper behavior becomes mainstream: Primenesia anyone?

Go ahead, count the number of subscriptions you really have. How many are there? You may be surprised, or even shocked.

The growth of the subscription economy has been explosive, and at the same time, almost invisible.

In markets that are dominated by Amazon, such as here in the United States, there is huge impact of Amazon Prime on shopper behavior.

So much so, that a new word mashup – Primenesia (Prime + amnesia) – has entered the consumer vocabulary. Primenesia jokingly refers to a very common reaction when Amazon (or other brands’) boxes arrive at the doorstep: the condition of not remembering what was ordered until you open the box.

But coining a new word to describe a new phenomenon is just one of the effects of the prevalence of this shopper behavior.

The subscription channel is an opportunity for brands to create an ongoing conversation and direct relationship with customers

FMCG marketers take note: shoppers are subscribing at record rates

As with other digital commerce trends, the pandemic accelerated the growth of subscription eCommerce sales. And that growth is projected to continue at double-digit rates (eMarketer). Once solely dominated by streaming media and entertainment services, the subscription channel for physical (i.e., tangible) goods is starting to catch up. According to Juniper Research, physical goods subscriptions will outpace streaming services within the next three years.

What does the growth in subscriptions mean for traditional FMCG companies?

As decision behavior experts very experienced in helping brands optimize subscription business models, we recently set out to delve deeper into today’s subscription lifestyle. We surveyed more than 16,000 consumers in five countries to determine attitudes, usage and acceptance towards subscriptions across both tangible and intangible goods and services.   

In each of the four categories of tangible goods that we explored in depth, there are clear early choices for subscription success. Think about the breadth of categories displayed here!

Below are the top subscription products we saw in our recent US tangible goods research.

Want to dive into more consumer insights about the subscription economy?

We found that even consumers with no current subscriptions are surprisingly open to becoming subscribers. However, they need to be reassured about the ease of changing/stopping a subscription, the issue of product buildup and the concerns about security.

Even among non-users there is strong openness to tangible goods subscriptions.

Five issues FMCG brands must address to thrive in the subscription economy

The subscription channel has clearly exploded. New consumer habits and behaviors are forming, with long-term implications for your brand.

Consumers are using subscriptions for convenience (to manage their frequent and regular purchases) and to be introduced to new products (the surprise and delight of curated boxes).

Regardless of your category, it’s important you don’t underestimate the impact of subscriptions on today’s 21^st century shopper.

Here are five issues your team will need to address to thrive in this new channel

1. Subscription business model strategy: Does your current business model fit the subscription channel? If not, are you adapting? 
2. Subscription channel value proposition: Do you have a value proposition for the subscription channel? What is your pricing strategy?
3. Channel-specific products and services: Does your product development process include products specific to the subscription channel?
4. Consumer subscription channel decision journey touchpoints: Do you know the consumer decision journey to choose a subscription?
5. Go To Market communications: Do you have subscription lifestyle-specific positioning, marketing and brand communications?

The subscription channel is a powerful tool to develop a direct relationship with your customers. Are you interested in a consultation around the subscription lifestyle? Want to dive deeper into these consumer insights for your category?

With more than a decade of experience helping the world’s leading subscription brands, as well as new entrants, optimize subscription strategies, we’re happy to help. SKIM provides subscription channel advisory and research services in strategy, product portfolio optimization, pricing, communications, innovation, and decision journeys.

Learn more about our solutions to implement and optimize your subscription model or schedule a consultation.