Subscription e-commerce, led by start-ups such as Dollar Shave Club, Blue Apron meal kits, and Stitch Fix personal styling, is a fast-growing new way of buying online. Our research shows that 15 percent of online shoppers have signed up for one or more subscriptions to receive products on a recurring basis, frequently through monthly boxes. Subscription e-commerce services offer these consumers—often younger, affluent urbanites—a convenient, personalized, and, often lower-cost way to buy what they want and need.
The subscription e-commerce market has grown by more than 100 percent a year over the past five years. The largest such retailers generated more than $2.6 billion in sales in 2016, up from a mere $57.0 million in 2011.1Fueled by venture-capital investments, start-ups have launched these businesses in a wide range of categories, including beer and wine, child and baby items, contact lenses, cosmetics, feminine products, meal kits, pet food, razors, underwear, women’s and men’s apparel, video games, and vitamins.
This strong growth has attracted established consumer brand manufacturers and retailers, which have also entered the space; for example, P&G (Gillette on Demand), Sephora (Play!), and Walmart (Beauty Box) have all launched new subscription businesses. The market has also seen significant M&A activity—in particular, Unilever’s $1 billion acquisition of Dollar Shave Club (2016) and the $200 million-plus deal that the grocery chain Albertsons did for meal-kit company Plated.