2PM - Subscription Box Fatigue

Must Read: Let’s face it: the subscription model is hurting. This is a problem, especially for food-based brands. Now add inflation and other cost of living increases and you have a recipe for increased churn, poor sales efficacy, and a less-than-optimal marketing operation. Here are several of the common issues facing the subscription box model for foodstuffs:

Niche market limitation: This company targets a specific market segment interested in a premium product. This focus, while beneficial for brand identity and customer loyalty, may limit its market reach. Expanding its appeal without diluting its brand could be a challenge.

Perceived value versus cost: The cost of subscribing might be perceived as high by some potential customers, especially when compared to buying a similar product from local supermarkets. Communicating the value and justification for the price difference is crucial.

Subscription fatigue: As mentioned in the context of subscription model fatigue, consumers are increasingly wary of accumulating too many subscription services. Food delivery services is likely at the bottom of the priority list when compared to services like: internet, streaming networks, and lower-cost niche media.

Customer retention: Keeping customers engaged and subscribed over the long term can be challenging. Subscription box companies need to continuously find innovative ways to add value to its subscriptions, such as introducing new products, offering flexible subscription plans, or providing unique recipes.

Geographic limitations: Face it, food delivery services cannot go international. And even more critical, there are challenges in maintaining product quality during shipping to certain areas. This could hinder market expansion and customer satisfaction. Ensuring consistent quality and expanding logistical capabilities are key.

Failure to respond to consumer trends: The rapidly changing food industry requires constant adaptation to new consumer trends, such as plant-based diets or the latest dietary fads. Diversification of products or distributive partnerships can help the subscription box company to stay relevant and appeal to a broader audience.

BUT: this essay also explores potential solutions for brands to combat rising box fatigue. Below, we include five relevant stories that collectively impact this segment of the direct to consumer industry. 

With subscription fatigue setting in, retail thinks hard about fees

Subscription models, now extending beyond traditional services to items like toothbrushes, are growing, with 75% of direct-to-consumer companies offering them. Despite their benefits, such as predictable revenue and customer loyalty, the risk of subscription fatigue is real, challenging companies to balance growth with consumer satisfaction.

Takeaway: subscription-based retailers are diversifying their models to offset churn.

Misfits Market: "DTC brands increasingly seek plug-and-play"

Misfits Market expands its B2B offering, "Fulfilled by Misfits," to help DTC brands cut costs amid economic challenges, leveraging its perishable fulfillment capabilities for efficiency and value. The service aims to provide a win-win solution for brands seeking to reduce overhead without compromising on product quality, amidst a broader industry trend towards operational consolidation and cost-saving measures.

Takeaway: DTCs are cutting costs and consolidating to reduce logistics expenses.

The great subscription news reversal

A leading indicator, news outlets shift from strict subscriptions to flexible paywalls, memberships, and increased ads amid a challenging ad market and subscriber growth hurdles.

Takeaway: consumers are cutting back any way that they can, even if the product was deemed an essential to them. 

High-income shoppers are becoming loyal to Walmart

Walmart sees increased shopping from wealthier households, gaining share in general merchandise like apparel and electronics, particularly via digital channels, highlighting its appeal across income demographics with its value proposition.

Takeaway: rising costs of living are beginning to impact the financially stable, this may further alter consumer behaviors.

The problem with your favorite restaurant

Four years post-pandemic, U.S. restaurants face ongoing crises that is altering consumer behaviors. Innovations like removing tipping and adjusting pricing are considered to attract talent and improve service but risk alienating customers used to traditional dining experiences.

Takeaway: more will eat in the comfort of their homes (or at least order in). 

Lululemon advances circular fashion with recycled nylon product

The retailer partnered with Samsara Eco to introduce an enzymatically recycled nylon 6,6 product in what the companies say is a milestone in textile recycling.

From September 2023: "When Lululemon made a minority investment in Australian startup Samsara Eco in mid-May, the move was a significant nod to the industry’s changing approach to sustainable apparel. The multi-year commitment marked Lululemon’s first step into the recycling domain, showcasing a shift towards using enzymes to recycle old textiles into new ones."

Starbucks Odyssey's community lead on brand loyalty

The NFT space may be down substantially from all-time highs, but brands and loyalty programs looking to reach fans in new ways can still find value, said. 

From November 2021: "Starbucks will be one of the first major retailers to tokenize its loyalty program."

US eCom market to reach $580 bn by 2027

A new report from Ken Research predicts that the US eCommerce logistics market will reach US$580bn by 2027, a 10.2% compound annual growth rate (CAGR).

The Great Defrag (an amazing retail media report by Criteo) 

The digital advertising landscape is cluttered with too many distinct channels, budgets, and metrics, creating confusion about audience reach and the effectiveness of ad spend. This complexity is only intensifying as the phase-out of third-party cookies continues. In response, retail media and the broader sphere of commerce media have risen as a sophisticated answer, offering targeted advertising based on first-party data and comprehensive reporting. However, we are only beginning to explore the full potential of these solutions.

Are billionaires the future of American grass-fed beef?

Grass Fed Foods, led by CEO Jeff "Trip" Tripician, aims to scale U.S. grass-fed beef production, leveraging Rupert Murdoch's Montana ranch. Facing industry challenges, they explore regenerative practices and innovative solutions, including seaweed supplements for methane reduction, while navigating economic and policy hurdles to increase domestic grass-fed beef's market share amidst competition from cheaper imports.

From January 2024: "The beef industry’s economic landscape adds another layer of complexity to the notion of regenerative beef. Inflation in the beef sector, as noted by Haden Comstock of NCBA, has led to a decrease in beef availability per capita in America."

Second Update to the DTC Power List, presented by Bold Metrics. All brands are updated with the secondary interest poll. The second update of 2024 sees some major movers: Nugget (+403 MoM), Caraway (+341 MoM), NooWave (+306 MoM), Noah (+266 MoM), Nice Film Club (+257 MoM), Nice Film Club (+257 MoM), Care / Of (+207 MoM), Backdrop (+127 MoM), Purple Carrot (+127 MoM).

800+ Brands Measured

Don’t build that eCommerce warehouse in my backyard

The trove shows how Chinese security services promote rivalry between private hacking companies, spurring them to target foreign governments and institutions.

Flexport launches platform connecting global shippers to carriers

Flexport has launched a platform that provides global shippers with access to a marketplace of small carriers and owner-operators.

The death of free shipping

Retailers used free shipping and free returns to get consumers hooked on e-commerce. Now those days are gone - for good.

Did you know? Aldi has built the third largest grocery retail company in America (by footprint)? Their partnership with Instacart is thriving and the market for their approach to grocery is growing as more are looking for any ways to combat rising costs of food. It's the perfect grocery store for a DTC brand looking to expand its reach. 

Leaked files from Chinese firm show global hacking effort

Related News👇🏽: The trove shows how Chinese security services promote rivalry between private hacking companies, spurring them to target foreign governments and institutions.

Rise of fast-fashion Shein, Temu roils global air cargo industry

Related News👇🏽: The rapid rise of fast-fashion e-commerce retailers such as Shein and Temu is upending the global air cargo industry, as they increasingly vie for limited air-cargo space to woo consumers with rapid transit times, more than ten industry sources said.

Executive Members / Excerpt (Read More): The scrutiny over Temu and similar platforms extends beyond competitive concerns to encompass broader geopolitical and security implications. The involvement of Chinese companies in the American retail space, especially those like Temu, which have quickly captivated a significant portion of the market, highlights the need for a careful evaluation of foreign digital platforms operating in the US.