Nearly a year ago, Amazon launched The Subscription Box Store, which has steadily grown to offer a massive variety of more than 100 brand boxes – everything from Crayola packages to German Food samplers to beard treatment boxes. Amazon’s unique customer trust, proven Prime subscription service (with 100-million subscribers), access to nearly every product on Earth, and unprecedented reach makes them an obvious Goliath when it comes to monthly subscription boxes.
Within Amazon’s 100-million-person strong Prime subscription program is a burgeoning collection of sub-subscriptions: a collection of product replenishment models that build repeat purchases and recurring revenue into Amazon’s bustling ecosystem.Hilary Milnes, ModernRetail
Amazon’s subscription programs, including Subscribe and Save, for lower-margin replenishment items like toilet paper, The Subscription Box store, which includes BarkBox as well as Allure Beauty, Fancy Socks and GQ boxes, plays a role in two of the retailer’s overarching goals: To drive profitability in its retail business and bring more customer-loved brands into the fold.
Boxes cost the same on Amazon as they do on brand’s sites. Amazon’s value, then, is in the ease of use: Prime members have payment and delivery preferences already set.
So the benefit for brands is integrating a subscription into a platform customers use regularly. For subscription-based direct-to-consumer brands, an Amazon partnership lowers the barrier to entry. As it usually works with Amazon, though, there’s a tradeoff involved: Subscribers are still Amazon customers, and the program limits the amount of control brands have over order frequency and personalization.
The last point is the biggest kicker for subscription box companies on Amazon. They’re losing all that precious customer data and the ability to talk directly with each customer at any given time. Amazon is treating every sale as their customers, even though they are only facilitating the payment of the subscription and not fulfilling the actual product. This is a major loss for retailers.
Additionally, there’s always the looming threat that Amazon will create a similar subscription box themselves, thus competing with the subscription companies they’re selling on behalf of today.
When we flash forward to 2030, Amazon is going to be one of the main portals through which consumers manage their multitude of subscriptions. However, they won’t be the only major winner.
Ryan has an interesting thought on an unexpected winner in the 2030 subscription economy:
Don’t get me wrong, I love the ease which the emerging subscription economy (and the closely related sharing economy) brings to consumerism. But, how much of these economies is too much?
After all, ownership is the route to wealth.
If everything is dictated by a subscription, a shared resource, or a rental product, then who are actually the people building wealth in this new consumer society?