Giulia Billi, marketing research professional and seasoned blogger, returns to the Kairos fold for a special look at curated and subscription-based commerce.

E-commerce keeps growing across the world, dramatically increasing consumers’ options and shaping new shopping habits. As seen by the figures reported in a Trendwatching.com article, dynamic growth is forecast in developed and developing markets alike:

At the same time, a recent consumer survey by The Harvard Business Review highlighted how all the options and information available on our digital age result in consumers’ cognitive overload. This is counterbalanced by a need for simplicity driven by very busy lifestyles, coupled with the pleasure of trying and discovering something to one’s own taste in this contemporary Aladdin’s cave.

This is where product curation comes in: style-masters, professional stylists, celebrities and experts on a certain field carefully select a limited and manageable choice of products. This proved successful already back in 2000, when ex-Tatler journalist Natalie Massenet founded Net-a-Porter. Now it is resulting in what Trendwatching.com defines as curated content consumption, which is associated with “story telling”, “character”, “authenticity” and “discovery”. This is also evident in the success of platforms like Pinterest allowing people to showcase their product preferences, among other things.

In this context, as it continues evolving and refining, e-commerce is deploying its full potential to offer a different shopping experience and address these needs of curation, simplicity, convenience, personalization and discovery.

Since 2010 there has been a rise in the number of e-sites offering handpicked item selections, usually on a subscription model that combines convenience, curation and the pleasure of being surprised and taken care of.

These curate & subscribe e-commerce sites cater to a wide range of consumers’ needs, from tea lovers, foodies and fashionistas to beauty junkies to new parents, with beauty & cosmetics seeing a particular proliferation of start-ups. Subscription fees range from the US$10,000 per year for a Net-a-Porter shoe-subscription to the US$39.95 USD for ShoeDazzle and the US$10 per month charged by Birchbox.

The table below summarizes just some of the key s-commerce sites present in different categories while an infographic by Kissmetrics zooms in on some of them.

Sources: http://www.trendwatching.com/trends/etailevolution/?easycommerce and http://www.seanpercival.com/blog/2011/08/27/subscription-commerce-subcom-matrix/

As an example of how these sites work, let’s take a close look at Birchbox. Customers register and complete a profile so that product selection can be customized for them. With a subscription of US$10 per month they receive five sample-size high-end beauty products from both well-known and niche brands. In a dedicated section of the website there are indications regarding how to use the products as well as an online magazine with expert interviews, tutorials and videos. To close the circle, there exists the option to buy full-size products online and thus earn loyalty points.  

The business model has several advantages: subscription retailers capture data detailing the tastes and characteristics of individual customers, allowing for personalization of the product selections and thus fostering customer loyalty as well as encouraging customer feedback on products. The subscriptions enable retailers to better manage inventory risk and stock, reducing storage and logistical costs and guaranteeing revenues. Furthermore, web customer acquisition costs are lower, so that also smaller category/product segments could be profitable. The model of course allows for some variations, for instance services such as Stylist Pick and Jewel Mint produce their own products while this is not the case for some of the other e-subscription services.

With an increasing competition and coverage of different categories by so many s-commerce firms, curated commerce has the potential to tap into an expanding audience, helped by technology and social networking that make marketing easier and more direct. And to top it all, Memberly was founded in 2011. This is a platform for subscription programs promoting them as a sustainable, winning business model. It will likely make it easier for a manufacturer to develop e-subscription strategy that allows them to curate and offer novelties while simultaneously forecasting and planning for demand and building deeper ties with customers. For instance tea-makers Twinings (UK) and Teavana (US) both offer tea of the month club subscriptions, where a tasting of different teas are sent on a monthly basis, while e-fashion pioneer Net-a-Porter has offered since the end of 2010 its aforementioned shoe subscription service. In order to succeed over the long term, though, e-subscription services must continue to offer products that are constantly exciting and relevant to their customers. Otherwise cancellations will inexorably erode their customer base. And of course product quality and customer perception of value for their money are both paramount in subscription livelihood. Perhaps the next step building on the success of curated & subscription-commerce will be a platform allowing customers to identify, choose and manage their favorite subscriptions across different categories, a paradoxical curation of the curation.