Buyers of online apparel subscription services, which have been likened to a virtual personal shopper, reach just over four percent of the online apparel buying population, according to NPD’s Checkout e-commerce data, which analyzes purchases at the receipt level.
This figure has remained constant between 2016 and 2017—the subscription buyer base is growing, but at the same rate as the online apparel customer base. Does this indicate that apparel subscription services were just another flash in the pan, or is it simply that this is a channel still in its infancy, where sustainable growth doesn’t necessarily go in a straight upward line?
After a three-year ramp-up period, more and more retailers are quietly getting into online subscription services for apparel. It’s easy to see why. Subscription services are a new and arguably more direct way for retailers to connect with the customer, create loyalty, and develop new customers in different markets. These consumers are clearly ready to spend, and the data indicates the potential for growth.
On the flip side, however, the Achilles heel of apparel subscription services is customer retention. With an average of only 49 percent of subscribers staying on as active users from one year to the next—a number that drops down the longer a specific subscription service has been in business—there is clearly some work to do before retailers can rely on it as a profitable mainstay.
Retention happens in two forms—first, in existing customers remaining subscribers, and second, in the product the service sends out hitting the mark. If every time you send out something the customer sends back, the service is actually costing the retailer more money than it’s worth.
Subscription services need to get more sophisticated, right along with their savvy customers. The longer you keep a customer, the higher the likelihood that the contents of your subscription box will be on par with her taste, but you still need to keep her attention long enough to reach that point. It’s up to each retailer to create novelty and excitement within the market, the consumer base, and the product mix, in order to create a higher level of retention.
Traditional retailers can be successful at selling product that’s not for everyone, as long as they are consistent enough to retain those customers they already have. But subscription services have to earn their stripes with every single package they deliver. In the second part of this series, we’ll take a closer look at what apparel subscription retailers need to do to be successful.