How to succeed with subscriptions in consumer goods: Lessons from the Best-in-class companies
In Spring 2020, the COVID-19 pandemic forced companies into a world of uncertainty. Managers faced pressing challenges in supply chains and shifting demand for their goods and services, as well as wholesale relocation as U.S. consumers turned to online channels in record numbers. In 2020, e-commerce represented 21 percent of retail sales, a 44 percent increase over the previous year. This increase in online shopping occurred in the context of the already existing popularity of the internet as a shopping platform, and particularly of increased customer interest in signing up for subscriptions. Before the pandemic, more than a third of American consumers planned to increase the number of subscriptions they used over the next two years, and new subscription offerings were popping up everywhere. While subscriptions have been common for a long time in digital markets such as news media, mobile phone service, and the like, the most significant change in the last few years has been an increase in using subscriptions to sell consumer goods. The pandemic exacerbated this trend; and the need for convenience, safety, and replenishment made subscriptions truly ubiquitous for consum-er markets such as hobbies, beauty, childcare, and pet care.
Due to the increasing popularity of subscriptions in consumer product markets, and due to the old and new challenges in managing them, the strategy and marketing consulting firm Simon-Kucher & Partners, together with Babson College, conducted a survey of consumer product companies to learn about their experiences with subscriptions. This research identifies and reports on best practices for companies to succeed in this space.