Insight: subscription box market to be valued at £1 billion by 2022
A new study has forecast that the UK subscription box market is set to reach £1 billion by 2022.
Royal Mail’s The UK Subscription Box Boom Report highlights how the market has been largely driven by start-ups due to the low barriers to entry. However, it also shows how bigger and more established companies are looking to emulate the success of brands such as Graze by setting up their own services.
Joseph Robinson, consulting director at GlobalData, said: “Spurred on by the growth of mobile devices, the subscription retail segment has moved on from a past focus on magazines and newspapers, to embrace everything from recipe food kits, to shaving gear and self-care.
“While still in its infancy, the category is now in a phase of growth, with major global brands such as HelloFresh, Harry’s, Birchbox and DollarShave Club increasing their efforts at expansion. At the same time, homegrown start-ups such as Cornerstone are greatly exceeding their own expectations for their subscriber base.”
While some subscription box brands have extended their reach by having their products stocked in conventional retail stores, Royal Mail’s study found that the market provides a significant opportunity for international expansion with almost 90% of subscription businesses making at least some of their sales overseas. Popular markets for international sales were found to be Ireland, France, Germany and Spain.
One of the biggest challenges for subscription box businesses was identified as “churn” or the proportion of customers who decide to cancel. To comabt this, Royal Mail found that a number of subscription brands had introduced innovative ways to keep customers engaged including diversifying their business model to reduce their reliance on subscriptions and launching new products and features. In addition, beauty box retailers such as Birchbox were found to be moving increasingly towards personalistion.
A spokesperson from Royal Mail said: “Businesses across the UK understand the significant growth opportunities that subscription services can deliver. The market is growing at a phenomenal rate. Future success will hinge on overcoming the key barriers to the take-up of subscription services whilst keeping subscribers engaged.
“At Royal Mail, we are ready to help businesses across the UK to succeed in the subscription space whether they already have a subscriber base or are looking to enter the market.”
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