Subscription Box - Beauty & Apparel

Part
01
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Part
01

Subscription Box - Apparel

Three companies of apparel subscription boxes in the United States are Le Tote, Stitch Fix, and Trunk Club. Additionally, we calculated that the average price per subscription box is $68.40, and the average churn rate is 36.6%.

1. Le Tote

  • Le Tote offers a monthly subscription box of rental apparel for women in the US that contains between eight and 15 clothing pieces and accessories they can wear for the entire month, and then return the items for free to Le Tote. They can also choose to keep the items they want with a discount on the cost of the item.
  • The price per subscription is $79 per month for boxes with eight items, $99 per month for boxes with ten items, and $119 per month for boxes with 15 items. Additionally, if the subscriber chooses not to receive accessories, they can get a lower price.
  • Le Tote's retention rate is 94% or a churn rate of 6%.

2. Stitch Fix

  • Stitch Fix is the most popular apparel subscription box in the US, offering clothes based on the person's style preferences, budget, size, maternity clothing, and apparel for men, women, and kids. The subscription process includes a detailed survey to determine a person's preferences.
  • In each box, the person receives five clothing items and accessories selected by a stylist. The person can then decide which items to keep and which ones to send back.
  • The price is $20 per box, and the client can choose to have automatic deliveries every two to three weeks, monthly, every other month, every three months, or manually without a subscription.
  • The retention rate was 86% in 2017 or a 14% churn rate.

3. Trunk Club

  • Trunk Club is a subscription box in the US by the Nordstrom company, that requires the user to complete a survey so the stylists can match the apparel items to each person's size, budget, style, etc. They even offer the option to review the trunk before it ships and to contact the stylist for special needs selections.
  • The price per box is $25, which is applied as a credit if the client chooses to keep an item.
  • The subscription box can be received whenever the client chooses or scheduled for automatic delivery every month, quarter, or any interval the client prefers.
  • The six-months retention rate is under 10% at approximately 8%.

Additional Information

  • The median churn rate of subscription boxes is 10.54%.

Research Strategy

To calculate the churn rate of the companies, we looked for the official data presented by the company, and if not available, the retention rate, which is the direct opposite of this value.

For example, for Le Tote, the retention rate is 94% which means, the churn rate is 6% (100 – 94 =6%), for Stitch Fix the retention rate is 86%, which means the churn rate is 14%, and for Trunk Club that has a retention rate under 10%, the churn rate would be a little over 90%.

We calculated the average price of the subscription boxes in the US from the prices of the brands identified:
Stitch fix: $20 per box.
Trunk Club: $25 per box.
Average price: ($79+$99+$119+$20+$25)/5 = $68.40

The churn rate was calculated from the rate per brand identified above: (Le Tote 6% + Stitch Fix 14% + Trunk Club 90%)/3 = 36.6%.
Part
02
of four
Part
02

Subscription Box - Beauty

The average churn rate for beauty subscription box companies in the US is estimated at 26.25%.

Dollar Shave Club

  • Dollar shave club has a 40-50% retention rate, six months after a subscriber is acquired.
  • That is a churn rate of about 50-60% (100 - 50% retention rate; 100 - 40% retention rate), an average of about 55% ((50% + 60%)/2)

Birchbox

IPSY

  • IPSY is another company that offers a beauty subscription box service, and the company stated that its retention rate is above 80%.
  • This means that the company's churn rate is about 20% (100 - 80%).

Fabfitfun

Average Churn Rate

  • Given that the churn rate of Dollar Shave Club, Birchbox, IPSY, and Fabfitfun is 55%, 10%, 20%, and 20% respectively, the average churn rate for a beauty subscription box in the US is about 26.25% (55 + 10 + 20 + 20)/4).

Research Strategy

To understand the average churn rate of beauty subscription box companies in the US, we looked at the churn rate of a number of beauty subscription box companies in the US identified in the preliminary report. Where churn rate data wasn't available, we searched for retention rate data and used it to calculate the churn rate by simply subtracting it from 100. In each case, we extensively searched media and industry databases such as Havard Business Review, Retail Dive, Forbes, Retention Science, among others for the data. We also searched each company's press releases and media interviews of executives of the company for the data.

We were able to find the data for Birchbox and Dollar Shave Club, while the data on retention rate or churn rate wasn't available for Julep and Glossybox. GoodBeing is now out of business and data on retention rate when they were still in business is unavailable.

We then also searched for other beauty subscription box companies in the US and then tried to find data on their churn/retention rate. We were able to find data for IPSY and Fabfitfun and have also reported it above. We then took the average of all the churn rate we were able to find and reported it as the average churn rate of beauty subscription box companies in the US.
Part
03
of four
Part
03

Subscription Box - Demographics

About 60% of the 5.7 million subscription box shoppers in the United States are women. Most U.S.-based subscription box shoppers are aged between 25 and 44 years, have a college degree, and live in urban Northeastern United States.
  • There are 5.7 million subscription box shoppers in the United States, according to Hitwise.
  • Both Hitwise and McKinsey agree that the actual customers are usually in the late millennial/early gen X bracket. McKinsey states that most sub boxes customers in the U.S. are aged between 25 and 44 years.
  • Both studies by McKinsey and Hitwise found that about 60%-61% of subscription box consumers in the United States are women.
  • According to McKinsey, most sub box consumers are located in urban areas in the Northeastern United States.
  • While McKisey states that most subscription box customers earn between $50,000 and $100,000, Hitwise's findings indicate that most had household incomes of over $100,000.
  • Hitwise found that most U.S.-based subscription box consumers have at least a college degree.
  • The population of the Northeastern United States is predominantly (65%) White. Whites are the dominant race with Hispanics coming in second and third at 15% and 11%, respectively. This increases the possibility that most subscription box consumers in the United States are White.

RESEARCH STRATEGY

The research team began by searched through media resources, market research reports, e-commerce-focused resources, retail-industry-focused resources, and statistics sites, among other relevant channels. We soon established that Hitwise and McKinsey are the leading research authorities in the field. This was because they are the most quoted resources by media resources. We dug deeper into their analyses and found information regarding the age, gender, location, income level, and education level of subscription box consumers in the United States. However, there was no information on the ethnicity of sub box consumers and it was evident that none of them provides any information on ethnicity. This could be because they were avoiding racial profiling. Having learned that most sub box consumers are located in urban areas in the Northeastern United States, the research team then explored statistics sites and established that the of the Northeastern United States is predominantly (65%) White. Therefore, there is a high chance that most subscribers are White.
Part
04
of four
Part
04

Subscription Box - Psychographics

Subscription box consumers in the United States subscribe to subscription box services because of the convenience, novelty, and value for money these services offer. They consider time a precious and scarce commodity, and they place a premium on new experiences. They spend nearly $500 per year on consumer retail product subscriptions, on average, and they seem to prefer Facebook and YouTube over other social networks.

Habits

  • Consumers in the United States subscribe to a subscription box service mostly because the service was recommended by someone, the service offers a financial incentive, or they want to try something new.
  • They continue their subscription to a subscription box service mostly because of the convenience, personalized experience, and value for money the service offers.
  • They cancel their subscription to a subscription box service mostly because they are dissatisfied with the product or the service, they prefer to just buy products when needed, or they are dissatisfied with the value for money they get from the service.
  • Box-of-the-month consumers cancel services for the following reasons: lack of budget (13.1%), poor value for money (12.3%), desire to just buy products one at a time (12.2%), change in interests (8.5%), price increases (6.2%), poor product quality (6.2%), desire to switch to a different service (5.2%), and conclusion of free trial (3.0%).
  • Women are more inclined than men to subscribe to a subscription box service for over a year. Forty percent of female subscription box consumers plan to subscribe for over a year, but only 19% of male subscription box consumers plan to do so.
  • Consumers most commonly use subscription box services that offer Amazon retail products (45.5%), shaving products (42.9%), pet products (35.7%), beauty products (32.0%), and clothing (26.8%).
  • Compared to the average consumer, subscription box consumers are 18% more likely to pay attention to customer reviews online. They are also 17% more likely to occasionally post reviews online and twice more likely to buy on Amazon.

Values

  • The popularity of subscription boxes in the country underscores the importance that consumers place on convenience and novelty.
  • Consumers view time as a precious and scarce commodity, so they have this desire for easy and convenient shopping experiences. Sixty-three percent of consumers in the country say convenience is what they find appealing about subscription boxes.
  • Consumers also believe in the excitement new experiences such as receiving new and curated items every month bring. This desire for novelty is the reason "unboxing" has become so popular. Novelty (64%) and variety (55%) are what consumers in the country like about subscription boxes.
  • Adults in the country believe subscription box services can offer the following benefits: time savings (48%), reduced risk of running out of items (39%), reduced responsibility (33%), money savings (29%), increased opportunity to try new products (20%), and budget simplification (18%).
  • They, however, believe subscription box services can result in the following drawbacks or problems: unnecessary increase in expenses (53%), excess product inventories (52%), shipment delays (34%), poor product quality (33%), environmental waste (27%), and identity theft risk (27%).

Spending Habits

  • Consumers in the country spend an average of $464.81 each year on consumer retail product subscriptions.
  • Consumers most commonly spend $20 per month on a subscription box service.
  • This monthly amount holds true across the following subscription box categories: beauty products, lifestyle products, pet products, fashion products, and products for children.

Media Consumption Habits

  • The following information suggests that, in the country, (a) subscription box consumers prefer Facebook and YouTube over other social networks, (b) the other websites subscription box consumers visit are often in the following categories: news and media, banking credit and lending, and computer electronics and technology, and (c) the topics that are most popular among subscription box consumers include news, fashion, clothing, health, travel, and food.
  • The top social networks that are sending traffic to Dollar Shave Club's website are YouTube and Facebook, with these two accounting for 78.66% and 18.73% of website traffic coming from social networks, respectively.
  • Dollar Shave Club's website visitors are interested in the following other website categories: news and media, banking credit and lending, video games consoles and accessories, and computer electronics and technology. The most popular topics among Dollar Shave Club's website visitors include news, fashion, business, games, video, health, clothing, travel, entertainment, music, food, sports, and style.
  • The top social networks that are sending traffic to Ipsy's website are Facebook and YouTube, with these two accounting for 49.95% and 34.66% of website traffic coming from social networks, respectively.
  • Ipsy's website visitors are interested in the following other website categories: beauty and cosmetics, fashion and apparel, news and media, and banking credit and lending. The most popular topics among Ipsy's website visitors include news, beauty, fashion, clothing, style, cosmetics, health, shoes, travel, and food.
  • The top social networks that are sending traffic to Blue Apron's website are YouTube and Facebook, with these two accounting for 61.11% and 22.94% of website traffic coming from social networks, respectively.
  • Blue Apron's website visitors are interested in the following other website categories: news and media, banking credit and lending, food and drink, and fashion and apparel. The most popular topics among Blue Apron's website visitors include shopping, food, clothing, fashion, news, travel, business, money, cooking, health, games, home, and entertainment.
  • The top social networks that are sending traffic to Bark Box's website are Pinterest, Facebook, and YouTube, with these three accounting for 44.27%, 37.38%, and 12.01% of website traffic coming from social networks, respectively.
  • Bark Box's website visitors are interested in the following other website categories: business services, marketing and advertising, banking credit and lending, and computer electronics and technology. The most popular topics among Bark Box's website visitors include news, fashion, home, money, clothing, recipes, travel, credit, business, and department stores.
  • Sixty-nine percent of subscription box consumers in the country have a digital streaming service subscription. This suggests that subscription box consumers are likely to stream television shows and movies.

Research Strategy

Since consumer psychographics are often determined through surveys, we began our research by looking for recently conducted surveys of subscription box consumers. Thankfully, there were several surveys that enabled us to determine the values, spending habits, and overall habits of subscription box consumers in the United States. Consulting firm McKinsey, B2B review firm Clutch, market research firm YouGov, the National Retail Federation, payment news site PYMNTS.com, consulting firm West Monroe Partners, and consumer insights provider Hitwise have all published surveys of subscription box consumers in the country.

As none of these surveys touched on the media consumption habits of subscription box consumers, and we could not locate a source that readily provides this information, we used web analytics provider SimilarWeb to gather insights about the website visitors of top subscription box services. Clutch identifies Dollar Shave Club, Ipsy, Blue Apron, and Bark Box as the top subscription box services in the country, so we looked into SimilarWeb's analyses of these brands' websites. Since the consumers of these brands sign up for subscription box services through these brands' websites, it is likely that most of these brands' website visitors are these brands' subscribers as well. The majority of these brands' website visitors come from the United States.
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