Subscriptions can be a powerful source of revenue when done right, but are often a challenge for fashion brands to take advantage of. Many people assume subscriptions are for everyday consumables that need regular replacement or for ongoing services – not for individual purchases like a pair of shoes. In fact, there is a significant opportunity for footwear and apparel retailers to use subscriptions in creative ways, to their advantage.
“Replenishment is an important aspect of subscriptions, but curation is really what customers crave,” said Jay Myers, co-founder and VP of growth at Bold Commerce. “Over the last year we’ve started to see the subscription model for fashion brands really take off, and for more than just ‘a shirt every month.’”
In a recent survey, Bold Commerce found that over 70% of respondents say subscriptions are important or very important to their futures. Subscriptions like ShoeDazzle and SneakerTub have subverted the traditional model by offering curated selections of product, corresponding to specific price tiers in a subscription box service. Customers guide their stylists by answering a taste quiz; stylists then select product for each individual and share these on a regular basis.
Alternatively, some companies like Fabletics operate a monthly “member pricing” subscription. Under these models, a shopper will commit to a monthly fee in exchange for higher spending power; for example, for a recurring charge of $50 per month, a customer will be able to receive items worth up to $100. This enables shoppers to save money while still retaining power over their ultimate selection.
“[Subscriptions] create steady revenue, with more predictable inventory demands,” said Myers. “It gives you better access to important customer data and trends with your subscribers vs one-time shoppers. And it also allows brands to access the untapped segment of their customer base who are willing to pay more, if given the option. Every brand has ‘super fans’ that will pay more if you allow them. Brands need to create a pricing model, or subscription plan for them, otherwise they are leaving money on the table.”
Achieving a successful program is challenging, but retailers are deciding that it’s worth figuring out; the Bold Commerce survey found over 80% of retailers whose initial program failed would try it again. One way to encourage success is to think beyond just product and discounting, when building out your subscription offering.
In addition to charging for curation or member savings, retailers might want to consider perks such as guaranteed free shipping or early access to new product. The ability to earn rewards on purchases might appeal to some shoppers, while others might be drawn to programs offering exclusive brand content, store access or brand partnerships, such as an athletic brand partnering with a gym on reduced class costs.
“Eventually every customer is going to get tired of the product, or they’re going to get ‘subscription fatigue’ – too many items backing up in the closet,” said Myer. “If it’s only about the product, they’re going to churn; if you offer more value than just the product, there’s a chance they might not. The higher that perceived value, the less likely that customers will cancel.”
The challenges of the past year may have some brands scared to experiment with new programs or channels, but the rewards are substantial. Bold Commerce reports that subscriptions are growing four times faster than US retail sales and subscribers have 178% higher lifetime value than one-time customers. If they can get it right, retailers could win big.