Subscription Boxes: Are They Worth the Money?
Whether you're a beauty junkie, foodie or DIY addict, chances are there's a subscription box service out there to scratch your itch.
If you're not familiar with this relatively new retail trend, subscription boxes are a fast-growing business model in which companies like Blue Apron, JewelMint and ShoeDazzle curate and send everything from prepackaged dinner ingredients to baubles or shoes straight to your doorstep.
Most companies require new users to complete a profile survey to determine their personal styles or tastes. Some surveys can be completed on a commercial break; others are as in-depth as an eHarmony profile.
Once your profile is complete, you'll receive monthly boxes in the mail with specialty products “handpicked" just for you. Today the boxes you can get delivered straight to your doorstep number at least in the hundreds, and are tailored to everyone from new moms to Francophiles to fishing enthusiasts.
The monthly subscription price ranges from $10 per month at beauty-centric Birchbox to upwards of $100 for more indulgent, high-end items, like luxury body oils and spa-quality anti-aging serums from MonthlyExpress.
All you have to do is scroll through your Facebook feed for pictures of your friends' latest deliveries (or see a targeted ad or two) to find evidence of how popular these services have become.
Why a flurry of subscription boxes now—and what is their secret sauce? To find out whether this new trend is worth the monthly expenditure, we turned to consumer behavior pros and real-life subscribers to share their insights.
Box Pop: A New Industry Is Born
Birchbox, arguably the most recognizable service today, put the subscription box retail trend in motion with its 2010 launch. Specializing in beauty, grooming and lifestyle products, subscribers pay $10 (for women) or $20 (for men) per month to receive goodies like skin rejuvenators, fragrances and makeup. Now the company has 800,000 active global subscribers, according to company rep Brittany Tomkiewicz—which translates to $96 million in annual sales.
In just four years since its inception, the industry has exploded. “[Subscriptions] represent a significant retail trend," says Virginia Lee, senior research analyst with market intelligence firm Euromonitor International. “With the glut of products available in stores, many shoppers like the curation factor of these subscription boxes."
As the trend spills over into countless retail categories, the opportunity for expansion only gets stronger. Lee expects the U.S. subscription box businesses to continue growing—but at a slower rate than what we've seen so far. As the industry becomes more solidified, larger players are crowding out some newcomers.
To stand out from the competition, Lee says new entrants need to offer cheaper products, à la Dollar Shave Club, or tout a celebrity affiliation. (Kate Hudson, Food Network chef Tyler Florence and style guru Giuliana Rancic have all jumped on the bandwagon, launching subscription services of their own.)
Even big-box retailer Target is getting into the game, incentivizing customers to join its relatively new subscription program by offering a 5% discount on all purchases, from printer ink to baby formula. (Just last month, the product assortment was expanded nearly tenfold to approximately 1,500 items.)
Need paper towels delivered twice a month? Vitamins every other month? The auto-delivery feature allows customers to personalize their orders according to their needs, with flexibility to modify the shipping schedule and quantities whenever necessary.
But if you're looking for a service that does the shopping for you, there's Stitch Fix, a popular subscription company that serves as your own personal shopper.
For roughly $65 per item, subscribers receive monthly clothing deliveries selected for them by professional stylists. First you fill out a style profile, which helps the company understand your size, style, shape, budget and lifestyle. After choosing a delivery date, you'll be charged a $20 styling fee that's applied as a credit toward anything you wind up buying from your shipment.
Each delivery consists of five clothing items and accessories—and if you buy all five, you'll get a 25% discount. Keep what you like and return what you don't by using a prepaid envelope. According to Stitch Fix rep Erin First, they've shipped hundreds of thousands of “Fixes" to every state in the U.S. since their 2011 launch
For the home chef, Blue Apron is another subscription giant that, as of last August, delivers roughly 100,000 ready-to-cook meals a month to 40 states in the country. (Unfortunately, much of middle America is out of their delivery zone.)
Blue Apron supplies fresh, preportioned ingredients along with recipe cards, so that preparing dinner only takes about 35 minutes. Roasted sweet potato and caramelized onion pizza, kung pao chicken tacos, and whole wheat spaghetti with fiddleheads are among the current menu options. Plans start at $9.99 per person per meal.
With so many options to choose from, it's no wonder customers are flocking to purchase their own subscriptions. But that's just half the story. What entices them to stay loyal month after month?
The Psychology Behind Subscription Boxes
Beth Hildner, 32, a dental assistant in Middletown, N. J., subscribes to Birchbox and Julep, a fast-growing box service for cosmetics, skin care and nail polish.
A satisfied customer, Hildner looks forward to her monthly deliveries with happy anticipation. “That surprise is definitely part of the draw—that curiosity of what's going to come next," she says.
And that's just it. Michael McCall, consumer behavior expert and chair of marketing at Ithaca College, says part of the subscription box magic is the thrill of wondering what you'll receive in the mail each month.
The rub is that after a couple of rounds of getting items you don't like, you may lose interest, McCall says—but that's often not enough to get customers to call it quits.
He compares monthly subscription box fees to gym membership dues: If customers are paying as little as $10 a month, they will perceive it as a good deal—even if there's not a clear benefit.
Plus, like a gym membership, the hassle of canceling is sometimes enough to keep you paying. While some monthly subscription services like Birchbox and Ipsy (another box program for beauty products) allow customers to cancel their memberships online, others don't make it as simple: For example, Julep requires you to phone in your cancellation.
But that's only a problem if you want to cancel: Many subscribers describe the thrill of getting items handpicked for them as reason enough to keep their memberships.
“The chemical reaction our bodies have when we're excited and waiting for that box each month—not knowing what it is, but knowing it's coming—creates an adrenaline rush," says Amanda Doman, site manager at the Illinois Institute for Addiction Recovery. “When something's being handpicked for someone, it's feeding their self-esteem. It makes them feel unique and keeps them continuing to purchase."
So before you invest, make sure you investigate the company's return policy, and stay on top of returning unwanted items—even if it's a pain.
For example, McCall says consumers are much less likely to return items that are already opened and in their living rooms, but you can fight this urge. Ask yourself: Would I have purchased this item on my own if it wasn't mailed directly to me? If the answer is no, return it.
Are Boxes Really a Good Buy?
Naturally, subscription boxes won't satisfy everyone. For Agnieszka Pniewski, a 31-year-old equity operations manager from Brooklyn, the model actually subtracts from the in-person shopping experience she enjoys.
She subscribed to Birchbox and Julep for three months, but eventually canceled both in favor of having more control over the quantity—and quality—of the products she purchases.
“I like loyalty programs and curated products, which you can also get at brick-and-mortar stores," Pniewski says. “For example, at Sephora, I'm more than happy with the level of personalized service I get, which translates to me wanting to purchase more there."
But if you're one of the many, many others who enjoy the thrill (and total convenience) of subscription boxes, remember this: The line between “wants" and “needs" can easily become blurred. (Does anyone really need a vacation in a box every month?)
Katie Colman, a Certified Financial Planner™ and managing partner at Siena Wealth Advisory Group, says shoppers trying to decide whether their subscriptions are worth it should ask themselves why they're utilizing a certain service. If you're constantly strapped for time and don't always make it to the grocery store for dinner goods, then it might be fun—and make financial sense—to enroll in a food-and-recipe delivery program like Blue Apron or Plated.
If time isn't your issue, Coleman urges you to weigh the overall cost effectiveness of individual services. Spending $19 a month on a BarkBox subscription may seem like a great deal on the surface, but could you otherwise justify spending more than $200 annually on treats, toys and grooming products for your dog? If not, step away from the computer … and make those individual purchases as needed.
But if you can find a subscription service that saves both money and time, you've hit the jackpot.
“With Subscribe & Save from Amazon, I have a recurring shipment and get 5% off, so it really saves me money," says Lindsay Karr, a 29-year-old teacher in Arlington, V.A. “Plus, if you add more items to your shipment, you get more [discounts]."
Karr has five items in her May shipment, including baby food, toilet paper and other home goods—all purchased at a discount and with free shipping. With a six-month-old baby at home, she says she simply doesn't see the point in running around town from store to store, likely spending even more money in the process.
Does your subscription sit squarely in the splurge category? Coleman says that's O.K. too—if you can truly afford it. “Maybe your Birchbox monthly surprise is your treat, and that's fine as long as you're meeting all your other financial obligations and it's not impacting your ability to meet your goals."
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. LearnVest Planning Services and any third-parties listed, discussed, identified or otherwise appearing herein are separate and unaffiliated and are not responsible for each other's products, services or policies.