[HUB Report] Subscription-Based Commerce - Brands at the time of Subcom

Editor's Notes

1. I- INTRODUCTIONA| CONTEXTEB| TECHNICAL PRESENTATIONC| FUNCTIONALITIESD| KEY FIGURESII- THE MARKETA| OVERVIEW OF IMPACTED SECTORSB| PRESENTATION OF THE SUBCOM MATRIXC| INTERVIEWS OF EXPERTSIII- SUBSCRIPTION SERVICES A|- ENTERTAINMENT|B| IT & SOFTWARE|C| LUXURY |D| TRANSPORTATION |E| TOURISM IV- FUNCTIONAL PRODUCT SUBSCRIPTIONS A| MASS CONSUMPTION |B| FOOD INDUSTRY |C| CHILDCARE |D| HYGENE & BEAUTY |E| TOURISM |F| HEALTH |G| ART |H| FUNERAL IV- EMOTIONAL PRODUCT SUBSCRIPTIONS |A| PRE-FABRICATED |B| COSMETICS |C| ENTERTAINMENT |D| WINE & SPIRITS |E| LEISURE |F| LUXURY |G| PETS |H| LIFESTYLE |I| FOOD V- TOOLS AND SOLUTIONS A| VALUE CHAIN B| SERVICE PROVIDERS C| SWOT D| PRICING STUDY VI- PREDICTION : WHAT’S NEXT ? VII- CONCLUSION
2. INTRODUCTION
3. E-commerce represents 51.1 billion euros in 2013 (vs. 45 billion in 2012) Source : FEVAD – Chiffres clés 2013 A sector that is attracting more and more stakeholders in France : The number of transactions in France rises (+17.5% in 2013) to the 600 million mark. Source : FEVAD – Key figures 2013 As far as the type of shopping : E-commerce mostly impacts a younger demographic  in France, 89.3% of people aged 25-34 are online shoppers Source : Médiamétrie – Observatoire des Usages Internet – March 2013 And the buyers largely tend to have the products delivered directly to their homes  82% of online shoppers choose in-home delivery Source : baromètre Fevad Médiamétrie / netRatings – june 2013
4. This is a true innovation in services and retail : A system of buying products through subscription Principle : the customer pays for a subscription and receives one or more products every month that are more or less personalized The e-commerce platform is an intermediary Enabling the re-enchantment of the act of buying Constraint :  find enough products to offer to subscribers  dependance on current events and stocks of brands   This trend started in the beauty and cosmetics sector and quickly declined Two types of stakeholders in the market: specialized sites and diversified actors in the box Around 120 boxes in the French market, all sectors included The concept dates back to 2010 and was initiated by Birchbox To have an idea of the volume in question : the platform Glossybox, for example, has around 220,000 subscribers worldwide.
5. Subscription commerce : a 6-step consumption cycle Tryvertising, brands supply products and distributors promote them. Targeted marketing for brands that is effective and highly qualitative. Subscription to a box. Discovery of products that, thanks to targeting, are original and tailor-made for our needs and tastes. Retention of customers via an attractive marketing environment, great customer service and an overall service that comes a bit closer to our needs with each delivery thanks to updates of targeting. Creation of a community around brands.
6. Novelty : The consumer doesn’t always have the time to go to a store and take a look at products that could be useful or tailor-made for him or her. Depending on the details that he/she shared with the supplier of the “box”, the consumer receives a tailor-made selection of new offers that are likely to interest him/her. Enjoyment : Except for the boxes that are strictly functional (products that have a clearly recognized necessity), there is a clear element of enjoyment found in the other services, linked to the act of buying in itself and the end goal of receiving products just as when we go to stores. Savings : The box style of shopping allows for testing of new products at lower prices or in a smaller size, in order to find tailor-made products without wasting money while trying everything or ending up with a cupboard full of products that won’t be used. Community : The fact that boxes are often focused on a product or a range of products allows a community to be united more easily on the various platforms of the box’s supplier in order to compare opinions and discuss products. This leads to helping subscribers in their shopping choices and also further refine the supplier’s familiarity with its customers. Originality and surprise : The mystery of the box’s content gives the subscriber the impression of receiving a gift every month. This fuels a certain suspense and creates anticipation. The opening of the box’s packaging turns into an event. This event therefore becomes loaded with expectations and it is in this that there is the chance with each delivery for the customer to eventually be disappointed.
7. - Online Registration People who are interested get invited to sign up online. - Fill out a questionnaire This is the most important step in the process, because it’s all about knowing exactly how customers are in order to send them a selection of personalized, pertinent and tailor-made products. - Subscription with our without commitment The subscription isn’t obligatory, the website visitor has the choice to subscribe or not, in which case (s)he can also benefit from prompt service whenever (s)he wants. - Monthly delivery of a selection of products The subscriber will receive a selection of products monthly, usually new products chosen based on his/her preferences. - Easy payment and in-home delivery of the box Payment of subscription price (spit playments possible) and delivery of the box to the home. Therefore, the convenience is that there’s no effort to make, such as leaving the house or other actions.
8. Curation : The interest for the client is to receive products that correspondent to him/her, via a selection that was already made. Practicality : Time and energy is clearly saved because the steps of finding, selecting and shopping for products have already been made. Sampling : The products’ formats allow for a quantity sufficient enough to arrive at an opinion about them, rather than ending up with a product that won’ t be used and was expensive to pay for. Flexibility : In some cases, if the content of the box isn’t satisfactory, it is possible to return the package and not be billed for that month. Moreover, subscription isn’t the only way that someone can benefit from the box service; it is possible to occasionally ask for deliveries.
9. REPEAT PURCHASES Win the loyalty of new customers :  There’s nobody more loyal than someone who pays for a subscription KNOWLEDGE Understand the needs of their customers :  An incredible panel of testers for their new products Collect information:  Subscribers test the products and give their opinions (via questionnaires) PROMOTION Earn some visibility amongst customers  thanks to the presence of products in the boxes  highlight the partner brand on websites / social media / blogs
10. Les chiffres sont extraits de l’Etude Xerfi "E-commerce par abonnement : Analyse du concept de box et de la dynamique du marché" Juillet 2013
11. This is a non-exhaustive list of different industries and companies that utilize subscription commerce as a distribution channel We notice that 3 sectors stand out and are largely represented - Food / household purchase - Cosmetics / Fashion - Entertainment / lifestyle The presence of these sectors serve as a reminder that women are the main target. It also reminds us that this market is at the mercy of trends and feeds off of them. Current events and new products from brands, in a sufficient quantity, are vital for this market in order to continue providing new discoveries and tailor-made products to subscribers.
12. L’infographie ci-dessus provient du blog de Sean Percival (Vice Président du Marketing chez Topix) http://www.seanpercival.com/ « Subscription-commerce-subcom-matrix » publié en Août 2011. L’infographie d’origine a été produite par Kissmetrics. Légende : Ronds gris  Rang par rapport au trafic (mesuré par Alexa.com Juillet 2011) Ronds rouge  Capitalisation en Dollars (Juillet 2011) On constate que toutes les tailles et tous les profils d’entreprises sont représentés sur le marché. D’où de grandes disparités dans les moyens et des difficultés à se maintenir et se développer pour les plus petits, face à des concurrents plus agressifs, dont le réseau et les ressources sont plus conséquents. En revanche on constate que la progression sur le marché est assez rapide. Si l’on prend l’exemple de Birchbox, l’entreprise capitalise 12 millions de dollars après à peine 3 ans d’existence.
13. Vous souhaitez solliciter Quentin Vacher ? Merci de contacter Vincent Puren, Head of Content du HUB Institute, pour une mise en relation : vincent.puren@hubinstitute.com
14. Vous souhaitez solliciter Martin Ohannessian ? Merci de contacter Vincent Puren, Head of Content du HUB Institute, pour une mise en relation : vincent.puren@hubinstitute.com
15. L’offre UGC Illimité n’est pas récente et fait partie de ce que l’on pourrait appeler les précurseur des abonnements. Abonnement mensuel qui permet à l’utilisateur d’aller librement au cinéma, de profiter de tarifs réduits mais aussi de bénéficier de nombreux avantages (événement, privilèges) Lien : http://www.ugc.fr/produitsEtServicesAbonnement.html
16. Toutes les box sont répertoriées sur le site touteslesbox.fr
17. Evian Chez Vous” propose un abonnement pour obtenir des livraisons régulières de produits de la marque chez soi. Le client peut choisir son jour, son créneau horaire et sa fréquence de livraison. Lien : http://www.evianchezvous.com
18. Ce site propose pour 39,95$ par mois une paire de chaussure, un sac ou un bijou, parmi les recommandations faites par la styliste du site web. Lien : http://www.shoedazzle.com/
19. Branding / Business Model Curation Utility / convenience Sampling Supply / Merchandising Listen to influencers Free product tests Layout and Presentation Users answer questionnaires for more customization Acquisition of consumer Use of celebrities Retention of Customer Critical e-mail campaign A subscriber remains loyal in principle
20. Il existe à l’heure actuelle aux Etats-Unis environ une vingtaine de solutions de gestion des abonnements, comme le fait en France LicenceToBill : Zuora : http://www.zuora.com/ Metanga : http://www.metanga.com/ Chargofy : http://chargify.com/ Aria : http://www.ariasystems.com/ Recurly : https://recurly.com/ SaaSy : https://saasy.com/ Spreedly : https://spreedly.com/ Mais ces plateformes ont un point négatif : « ces acteurs ne savent gérer que les paiements par carte bancaire et, par conséquent, s’exportent très difficilement en Europe » explique Sébastien Rousset, co-fondateur de LicenceToBill. Leurs pratiques ne correspondent donc pas forcement aux usages de paiement des européens.
21. Our entire consumption will not become fully automated in 2015 and it probably never will completely because some products aren't on our regular buying schedule. However it is true that this is the model towards which the consumer society tends to move. With rapid urbanization and the accelerated pace of life in big urban areas, it's a safe bet that this purchasing model will not only normalize certain products, but also extend to other industries and thus reach new targets.
22. Aperçu des secteurs qui seront probablement les prochains à proposer ce business model, au moins pour developper la notoriété de leurs nouveaux produits Divertissement : Boxes contenant des accessoires, des goodies ou des jeux via un abonnement. Décoration : Recevoir des éléments de décoration chaque mois pour embellir votre appartement Culture : Boxes contenant des billets de spéctacles et activités du moment. Offre culturelle a portée de budget et suggestions de nouveautés. - Animaux : des abonnements pour louer des animaux de compagnie pour une durée limitée, dont tous les caractéristiques pourraient être personnalisés (espèce, age, durée, etc.) Tech : Tester de nouveaux smartphone, objets connectés, avec un accès limité aux focntions
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