Subscription Box Fatigue: Myth or Reality?

If the subscription box market has topped out, consider these tactics for survival in a competitive environment.

Source: Bigstock

There has been a lot of press coverage of the subscription service trend in recent years, but 2018 has seen more reporters and pundits opining about subscription box fatigue. The number of offerings is too vast, and the publicity and marketing too overwhelming, they say — and consumers are now turning away from the industry.

Adrianne Pasquarelli in AdAge writes that the subscription box market is fighting fatigue:

  • Another day, another box. They land relentlessly on doorsteps across America … The deliveries arrive in an almost numbing drumbeat of monotony, the antithesis of the unpredictability and joy they once carried. And they’ve created a new malady: subscription fatigue. The subscription market is more crowded than ever as mainstream brands, including Gap, Under Armour and Target, have rolled out their own apparel boxes, lessening the appeal of getting a monthly mailing filled with the unexpected.

At Forbes, Andria Cheng writes that the subscription box industry is getting more crowded than ever. “There are signs the once-hot sector is increasingly a market-share fight,” she says.

At the CFO magazine site, Brendan O’Brien describes the result of what he calls “subscription gluttony.”

As new subscription services flood the market, over-saturation is leading to subscriber burnout. The concept of “subscription fatigue” has led to the emergence of a growing number of “unsubscribe” services.

At AssociationsNow, Ernie Smith asks, “Could subscription fatigue create problems for membership programs?”

Consumers, worried about their budgets, could become more careful about what they’re willing to pay for on a recurring basis. And that could pose a challenge for membership programs.

A year and a half ago, in my first column for this site, I looked at the Sub box industry. At the time, the best available measure of industry growth was the Hitwise report on traffic to sub box web sites. Here’s the data I had on hand then:

I made the case for a strong growth outlook, and the data at the time seemed to back that up. But since then, Hitwise has updated its data, and the new totals look like this:

(Source: Hitwise, via Forbes)

The portion of this new graphic that runs from Feb 2016 through the present was not available to me then. Now looking at it, it is pretty telling. It is clear that website traffic has plateaued. The makers of this graphic are eager to point out the 890% rise since 2014, but they do not highlight the 10% decrease since January 2017’s peak.

The industry has grown a lot since beauty service Birchbox was launched in 2010, and since meal delivery service Blue Apron was launched in 2012. But the industry site traffic data, used as a stand-in for industry health and growth, suggests a mature industry that has reached a certain level of saturation. The potential for growth from that level onwards has yet to be seen.

But that data is just based on website traffic. Is that really an adequate stand-in for the financial results we would prefer to track? Here is some more anecdotal evidence favoring the theory that the industry is facing a growth plateau.

A survey by Fetch, conducted in June 2018, asked 1,500 subscription service customers about subscription saturation. 77% agreed that “with so many paid subscription services nowadays, it makes it harder to choose.” The research report calls this “the paradox of choice.”

Competition is growing especially fierce in the food-kit segment. In July, subscription meal company Chef’d suspended operations, per the Wall Street Journal. That was just a month after announcing a deal to distribute its kits in New York City drug stores. Commenting on the news, Brittain Ladd in Forbes wrote, “There is also little to differentiate meal kits from each other, and this is leading to fatigue among consumers. Simply put, when it comes to the meal-kit industry, there will be blood. Lots of it.”

Reinforcing that prognosis, consider this look at venerable meal kit company Blue Apron’s recent performance:

(Source: Blue Apron, via Statista)

Writing for Fast Company, Elizabeth Segran declares, “We’ve hit peak subscription box.” She cites research showing increased competition in the subscription box space:

In the overcrowded world of subscription boxes, the wheat is now separating from the chaff. Of the many new subscription boxes that have mushroomed over the last few years, at least 13% have ceased operations, according to the website My Subscription Addiction, which tracks every new box that hits the market.

At The Hustle, Conor Grant has a couple factoids to back up the idea that the subscription box market has plateaued.

You know the market is saturated when people launch businesses to launch other people’s businesses, but Cratejoy.com does just that with posts like “8 Simple Steps” to succeed as a subscription box biz. In reality, it’s hard for most subscription box businesses to stay on their feet; more than 1 in 10 went bankrupt in the early rounds, and others are taking a slow beating, selling for less money than they raised to pay off their debt.

While web traffic data and a range of anecdotes may not prove the case in a court of law, it does suggest that there’s something there. The rosy forecasts of massive future growth may need a second look after all.

Planning ahead, what does all this mean? And what can subscription retailers do to come out ahead as the market evolves toward a competitive zero-sum game and less of a situation with easy low-hanging fruit for all?

Forbes’s Richard Kestenbaum makes the case that the market is turbulent but not in decline.

Subscription is more in flux than most other retail channels. The leadership positions in most segments of subscription are not established and growth rates in sectors can change a lot both up and down. … The business is still being invented and it continues to have unlimited potential to influence how consumers shop.

That’s an optimistic take, but even this analysis suggests that savvy competitors will eat your lunch if you are not even savvier. In the face of that need, Shashank Venkat at Cerillion offers six pieces of advice:

  • Try tiered pricing.

  • Consider fixed-term subscriptions that stop after a predefined period.

  • Offer loyalty discounts and offers.

  • Continue adding value.

  • Build relationships with customers.

Writing at Recurly, Marilyn Latham has two more tactics to try:

  • Let your subscribers pause instead of canceling.

  • Offer canceling subscribers a chance to downgrade their service.

Insider Take

In my opinion, there is more than mythology to the idea that the subscription box industry has reached a certain level of maturity, in which a company’s growth will likely come at the expense of its competitors since the pool of potential customers has maxed out. There is still room for creativity and exploring new niches, but the easy, popular services have now been pretty well explored. The future may be more cut-throat.

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