eCommerce is at the moment an industry which is hot. Hot in the sense that there is investment being done and new verticals are being created. Creative solutions that help users solve problems and make offline events happen online are emerging.
The most obvious example of this trend is, group coupon buying which has been made popular by Groupon and Living Social in the US. I have my own doubts over this area but the reason I mention this here is to highlight the fact that 2 years ago this ecosystem did not exist. So in the space of 2 years, multiple players have emerged and some of done this with a twist. Dealify for example have gone into ensuring that they offer hyper local deals. Gemgem focus on the mom and baby market here in South Africa.
Gemgem bases its business model on the successful US ‘Groupon-clone’ site called Plum District, which understands the importance of the family market. Its rising success is driven by the power of the mom population in the US. Plum District CEO Megan Gardner says, “We know we’re doing something different because of the narrow focus of the audience, no one is focusing on the moms and the other thing is the moms’ sales force. We are not a one-hit wonder media buy.”
Currently, there is a new vertical which has been getting a fair amount of attention lately. Subscription commerce is an exciting space for me as I see huge potential.
There’s a big trend right now with these monthly boxes or subscription based businesses. Basically these services have members who pay a monthly fee to receive some type of box each month. This can be a wide range of things from samples to full-on products. In most cases the contents are highly targeted and curated by an authority on the vertical they serve.
I am not an investor nor an analyst but I think Rob Go, a VC nails the reasons what subscription commerce needs to do in order for it to be effective:
But in addition, the subscription needs to actually solve a problem for consumers that existing buying options fail to do. Right now, it looks like there are a couple “jobs” that the subscription can do:
- Curation. This is being demonstrated by Shoedazzle, Trunk Club, Babbaco, etc. The job that the subscription service fulfills is choosing stuff that is a fit in a highly subjective category
- Trial / Sampling. This was pioneered by Birchbox. TurningArt also falls into this category by allowing a “try before you buy” experience for a high-consideration good like art.
- Convenience. Companies like Manpacks and Guy Haus promise to save consumers time by having the things they need replaced on a regular basis just showing up in the mail.
Paul Marsden shares potential opportunities in the subscription commerce industry for it to evolve even further:
The subcom industry is new and evolving, but it strikes us that emerging opportunities for these clubs include
- More social features that make them more, well, club like (it’d be nice to have a members forum to discuss contents)
- More ‘CineMatch’ style personalisation – using feedback, quizzes, and the open graph data
- Celebrity curation – this month’s box chosen by…
- Further incentivising members to post reviews (video/photo/text) of their favourite box contents could amplify the word of mouth effect of subscription clubs
- Digital boxes – virtual boxes of apps – curated bundles of apps by subscription
- Samples for friends – includes samples and vouchers to hand out to friends to increase the viral effect
- Specialisation – boxes for specific demographics – if there’s a magazine for a demographic, there’s a sample box subscription club opportunity
- Share a subscription with a friend – get it every two months – swap and share
When I look at the above I am excited. The use case that almost immediately hits my mind is one of grocery shopping. The subscription is done potentially by a grocer who wants to add ecommerce to its offering or accentuate its current offering. The user signs up and then gets a list of potential pricing with a clear indication of the amount of items are available per pricing scale. We all eat and grocery shopping is done by most people (not everyone wants to admit to the shopping part).
I cannot understand why no retailer is doing this but if you can ensure that I spend x amount with your business it is almost a slam dunk. The groceries will then be shipped to me on a predetermined amount of time (every 3 or 4 weeks). I win as I dont need to go the shop and the retailer then also wins as he is “guaranteed” revenue for a period of time.
There is huge potential here and the concept I think could be sustainable and become hugely popular and profitable.