ShopTalk: Subscription services and small businesses

 

Want to try the latest hand-selected health and beauty products, customized to personal tastes? There’s a subscription for that. Or have the hottest movies and television shows streamed to a handheld device? There’s a subscription for that, too. Subscriptions have had an impact on everything from the media that people consume to the food they eat, with healthy snack delivery and meal kits gaining popularity. The number and variety of subscriptions available to consumers seems to grow daily.

Subscriptions are, of course, nothing new. Newspapers and magazines are some of the oldest types of subscriptions and, according to a new ShopTalk survey, among the most popular. In a survey of over 1,000 consumers conducted by Vantiv and Socratic Technologies, 79% of respondents report having an active subscription to a product or service. Of those who subscribe to a service, 41% subscribe to newspapers or magazines. Online video services are a close second at 39%, followed by gym memberships at 23%.

The survey also shows that product-based subscriptions are less popular than service-based subscriptions. Only 37% of respondents subscribe to a product, with the most popular type being personal grooming (15%). That’s followed by household items (13%), personal health (12%), pet supplies (12%), and food items (12%).

What’s the draw of subscriptions? For service-based subscriptions, the convenience of having news, information, or entertainment delivered directly is a significant selling point. For product-based services, it can be about the convenience of having staples (household items, pet supplies, razors, etc.) delivered to one’s doorstep. Product-based subscriptions can also offer curated boxes, which create an element of surprise for the recipient. This can expose them to new products and the latest trends.

Add to that the demographics of consumers that are purchasing subscriptions. Millennials are big fans, with 92% of survey respondents reporting active subscriptions. Compare that to Baby Boomers, who are the generation that’s least likely to have active subscriptions at 70%. Companies of all sizes are interested in engaging Millennials and their shopping dollars to build steady streams of revenue that can last into the future.

Another important piece of demographic information is the breakdown of men versus women that purchase subscriptions. The survey reports that 41% of men (versus 31% of women) currently have a product subscription. And 81% of men (versus 67% of women) currently have a service subscription. It seems that men are highly attracted to subscription-based products and services. And companies of all sizes are taking note.

Some of the most popular subscription services are sold by the largest companies. Netflix and Amazon have made a huge impact in the subscription entertainment space, and start-ups like Dollar Shave Club have been purchased for sizable price tags by corporate behemoths. But that doesn’t mean that small- and medium-sized businesses (SMBs) are being left behind.

Small businesses that sell everything from hand-made gifts and jewelry to children’s apparel are getting in on the game, too. And they’re being powered by technology that can help them build thriving subscription business models. Small businesses are also using services like Etsy to take their subscription-based offerings to large audiences. As more SMBs sell products and services through subscription-based models, it’s only a matter of time before they grow into the large businesses of tomorrow.

Here are some other facts revealed in the survey:

  • Monthly subscriptions are the most popular types of subscription – 54% of respondents pay for their subscriptions on a monthly basis
  • Credit cards are the most popular way to pay – 52% of respondents pay for their recurring subscription charges with a credit card
  • Subscribers don’t feel locked in – 60% of respondents believe they can cancel their subscriptions at any time
  • Non-subscribers have little interest in purchasing subscriptions – 77% of respondents who don’t currently have a subscription plan to stay that way
  • 23% of non-subscribers are interested in future subscriptions – they report that they would choose practical goods like household items and pet supplies, or they would subscribe to newspapers or magazines
  • Streaming video subscriptions are universal in their appeal – all generations report subscribing to online video, with Millennials subscribing most frequently (60%) followed by Gen Xers at 47%, Baby Boomers at 28%, and Retirees at 20%
  • Netflix is the most popular online video subscription service with 70% of respondents subscribing – this is followed by Amazon Instant Video (39%) and Hulu Plus (23%)
  • Only 35% of respondents have purchased subscriptions as gifts – Millennials are the generation that’s most likely to have purchased a gift subscription at 61%

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