Research tells us that one of the things that makes decision-making more difficult is having too many choices. While we may think that having many choices is a good thing, fear of making the wrong choice - called loss aversion - is amplified when we have more choices.
One way to deal with too many choices is to make smart ones and repeat. When in office President Obama always wore a blue or black suit. That's easy. Our brains like binary choices.
But what about letting someone else decide?
That's where subscription services come in. Suddenly they are everywhere.
Birchbox offers a monthly package of five samples from a variety of beauty categories like skin care and hair products. But, if you are more interested in makeup than skin care products then Ipsy might be for you.
SnackCrate will send you a box of food-like-objects that you really shouldn't eat curated from around the world. They say they "deliver happiness."
But if healthy food is what you want you can check out - Health Surprise for $42.49 a month and Butcherboy for $149 a month. Bokksu will even ship you sushi direct from Japan for $39.99 a month. Such a bargain.
If choosing what to wear gets you down - there's always Stitchfix. They don't require a subscription anymore, but they do encourage automatic deliveries in time frames ranging from two weeks to three months.
Is it any wonder then that many people are oversubscribed? Or that they don't realize how much money they are spending on monthly subscriptions?
In a 2019 survey of 2,500 consumers done by the Waterstone Group, people guessed that they were spending $79.74 a month, when in fact they were spending $237.33 a month. (Freedman, 2019)
That's a lot of money.
So now a bunch of companies that help people cancel their monthly
subscriptions, like Truebill, have emerged.
Why do people buy subscription boxes? Are there different motivations for different types of products? Different types of people? Why do people need help canceling subscriptions?
Do you subscribe to any monthly boxes? Which ones and why? Are you considering canceling?
Freedman, D. (2019, July 24) How Much Do Subscriptions Cost You? Probably More (and Maybe a LOT More) Than You Think. thesimpledollar.com. Retrieved March 16, 2021, from https://www.thesimpledollar.com/save-money/how-much-are-subscriptions-costing-you-probably-more-and-maybe-a-lot-more-than-you-think/
6 comments:
I think the subscription e-commerce market is not going anywhere- especially with COVID and the risk of venturing outside. This market has grown over 100% every year for the past 5 years according to McKinsey. Additionally, the same study found that 49% of consumers maintain a subscription to at least one service- this does include media subscriptions like Netflix or adobe suite, however.
Data I found suggested that e-commerce subscribers tend to be young (25-44) 60% female city dwellers with high income (50-100k) in the Northeastern US. One thing I found particularly interesting was that the median number of subscriptions an active subscriber holds is 2, but 35% have three or more. Also, men who subscribe were more likely to have 3+ subscriptions than women (42 v 28%). To me, this suggests that men value automated purchasing.
According to my research, there seem to be 3 types of subscriptions, each with specific benefits of subscribing: subscriptions that curate products for the consumer (ex. stitch fix and blue apron), ones that replenish necessities (ex. Billie, Chewy, Amazon subscribe), and ones that allow exclusive access to items (ex. Few Moda, Justfab).
I think people subscribe to curation boxes because it tends to be an affordable way to sample things, it also removes the need to make a decision. My good friend who is a 3rd year associate in big law in NYC subscribes to many of these types of boxes. She told me she has very limited free time and doesn't want to spend it researching and shopping for things. She has enough disposable income where it makes sense to pay a premium and have a stylist curate items she would like. I personally would never subscribe to these types of boxes because I am opinioned and enjoy surveying options.
The second type is one I use very frequently. When I know I am going to need something regularly, and a company or supplier gives me the option to auto-ship the item, I always say yes-especially if I get a discount! I do this with razor blades (Billie), dog food (chewy), cleaning products (amazon), and deodorant (amazon). Since these are things I know I will need and usually I get a discount, I do not see a reason not to subscribe.
The third type, access subscriptions, provides subscribers with the option to purchase items they otherwise would not be able to or offer a discount. When COVID hit and I wanted to avoid the subway for safety, I subscribed to Uber Pass. For a fixed price of $25/month, you get 10% off every Uber, Uber XL, and Uber comfort ride, 15% off Uber premium rides, unlimited $0 delivery fees on grocery and food delivery, and a boost in points for Uber rewards. Points can be redeemed for further Uber discounts or trials and freebies with affiliates like apple tv and WeWork. In the first few months, my Uber pass paid for itself! But once businesses began to mandatorily close, and I had nowhere to go, I canceled my pass.
Additionally, I think people view many of these subscription boxes as a present. You do not always know what you will get and that's exciting! It is also fun to get something other than bills in the mail. However, when one forgets about their subscriptions or the excitement fades, it is probably time to cancel!
I try to keep my monthly overhead as low as possible, so unless I get a discount, or the subscription ends up paying for itself, I try not to subscribe.
I do not subscribe to any monthly boxes, but I am thinking of subscribing to meal kit boxes. These days, I cook at home a lot compared to before COVID. Every day I have to come up with what to cook, and I feel it is challenging to keep all the fresh ingredients in the refrigerator. Whenever I try to cook a new dish, I realized there are no one or two ingredients. So if someone chooses foods what to eat, it would make my life much easier.
Besides decision-making for me, there are several more reasons why people buy subscription boxes. First of all, most subscription boxes are curated based on the particular needs and preferences of customers. For this reason, people satisfy more, and they are likely to have high loyalty to the company. Second, the motivation to buy these subscription boxes is explained through the powerful rush of dopamine that we get both when there is an anticipation of a reward and when the reward is actually delivered. Last, although almost all brick-and-mortar stores have reopened to shoppers in many regions, many people still don't want to go to brick-and-mortar stores, and subscription boxes solve the people's worries about getting a virus.
When I look at demographics, subscription box customers are young urbanites with money. The age range is 25 to 44 years old and incomes from $50,000 to $100,000. These subscriptions particularly appeal to women, who account for 60 percent of them. What are they most buying? Women are more subscribe to beauty and apparel services. By contrast, male customers are mostly getting razors, video games, and meal-kit. This market will become bigger and bigger. Thus, traditional retailers such as Target, Walmart, and Amazon also started subscription box service, and this market will be more competitive soon!
-Hanjo Mok-
Hello
I think that initially, people buy the subscription boxes to meet their needs of services and goods especially due to the inability to go and buy them from the physical stores and also the distance and thus offers convenience to the customers. In this way, the subscription boxes deliver things that people use regularly through a simple process of buying. Additionally, the focus of the things chosen are particularly based on the customer’s preferences adding a personal touch with an assortment of products packaged for the benefits of the customers. Through these aspects, customers are motivated to subscribe to the services, with the expectation of receiving the items advertised. The motivations vary depending on the different types of people as well. In this case, depending on the needs and preferences of a person, the subscription can motivate a person through what is being offered including book services, Wi-Fi, movie/TV services, children’s subscriptions, home security services, beauty products, diet/fitness apps, gaming services, etc.
However, the subscriptions most times fail to provide the customer with choices of the items to receive leaving them stuck with stuff they may not actually want. Also, though the subscription box costs less compared to buying the items separately, it is possible that one would not buy all the items sent if they were being bought somewhere else, this means that there is the risk of overbuying through these services. The value of the items is also unclear because there is no chance of comparing the prices with the products every month or year not being quantified based on their worth. The problem is that most people fail to cancel their subscriptions because they find it hard to do, or they keep postponing cancelling hoping to get something else in the subsequent subscriptions. Therefore, they would need help in canceling the subscriptions.
In my case, I have subscribed to some online magazines and articles which I currently use for my research including the New York Times, Washington, Post, Forbes, and the Guardian. I also subscribe to Wi-Fi services and movie and TV services for my entertainment and communication. So far, I think they have been useful for me and I don’t think I will cancel them soon.
I feel it is true that many people subscribe to certain products and services to ease the mental tension of having too many options available to them. This component tends to play out in the widespread adoption of subscription services. Furthermore, there are different motivations toward subscribing to tangible products and intangible services. For example, the subscription to a magazine may be derived from the joy of receiving a magazine with general topics that will interest a person, while alleviating the psychological tension being built up from having to decide which particular magazine to purchase for the month. However, a service based subscription for a gym membership allows a person to know they have this service at their disposal if they do choose to utilize it. Additionally, it may be motivated by appeasing their sense of belonging to a community of gym members/tribe. There are different types of people with different sorts of motivational factors. I feel that subscribers may be people who are less decisive, but still want a sense of belonging. They want to loosen the reigns of personal control in their lives toward various things. Most people may need help canceling subscriptions because they do not fully understand the “fine print” in subscription contracts, as well as not wanting the burden of having to figure out how to implement that process. No, I do not subscribe to anything because it is a monthly expense that I can do without for now.
People buy subscription boxes because of the convenience and the fact that Americans are glued to their smartphones 24/7. Having the world at your fingertips (literally) causes more people to shop more spontaneously. The different motivations people may have for different products may result in the consumer shopping for the product or service that best meets their needs or both. Once people determine they will cancel subscriptions, some need help because, again, there are too many choices, and the consumer always wants the best-or the next best thing. Having that choice made for them provides a comfort-level in knowing that they've canceled the worst subscription from the list based on "expert" opionin.
I do not subscribe to any subscription boxes, nor will I in the future.
I have subscribed in the past to a clothing box that sends you new outfits each month. However, I was not of fan of the clothes they would send, and although it was advertised that you can return the clothes you don't like for free, you still end up paying for a portion of the return. So, as a cost analysis, it was not worth the money. I was interested because they offered the convenience of not spending time shopping for your own clothes, and it was interesting to see what new styles I would like. I recently received an email from a company called CUTS that makes comfortable tailored t-shirts for men. They recently launched a subscription box that sends two tailored T-shirts each month. The company expresses that the box is a good deal because the shirts are up to 30% less than if bought through an individual order.
https://www.cutsclothing.com/membership/
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