Out of the box

Out of the box

It seems like a no-brainer. Man has needs (or wants). Man is lazy. Subscription retail programmes deliver those needs (and wants) to Man's doorstep on a regular basis - all at the click of a mouse.

Man is happy. Pioneered by four-year-old American start-up Birchbox, subscription box services are now dime-a-dozen in the United States and Europe - and the innovative retail format is fast becoming a way of life here too, with more than 10 of such new services launched in the first eight months of this year, by everyone from local actresses to mum-preneurs and former bankers.

The subscription retail model works like this: buyers commit to a one-month, three-month, six-month or an annual subscription for a box containing typically four to eight items curated according to a theme to be mailed to them on a monthly basis.

The items can be trial-sized samples obtained for free from brands who want to market a new product to a niche group of customers, or travel and full-sized products purchased by the box curators, who typically also run e-commerce stores for repeat orders.

Subscription boxes first made headway in Singapore in 2012 with beauty boxes offering make-up and skincare samples such as Bellabox, Vanity Trove and Glamabox. These days, you can get a subscription for your every need, from surprise boxes containing kids' toys, pet supplies and organic products and healthy snacks, to more utility-based regular supplies of creature comforts such as beer, wine and coffee - and even sanitary napkins.

Caleb Leow of said sanitary napkin provision service PSLove attributes the increased popularity of subscription retail to Singapore's increasingly online and mobile-savvy population. Likening it to newspaper and mobile phone subscriptions, he says: "Long ago, you had to go to magazine stands to buy your daily newspaper or pay your mobile phone bills at the post office regularly, this is not very different. With technology, every part of your life can be now simplified through subscriptions."

Besides the surprise element, subscription retail appeals to customers who are too time-strapped, too overwhelmed with choices - or simply too lazy - to pick out items for themselves.

"The whole idea of subscription is that people like not having to choose the items. It forces them to overcome the psychological barrier against trying something new that they normally wouldn't pick off a shelf," says Roland Utama of craft beer shop Thirsty, who initially rolled out his Monthly Beer Club subscription service for regular customers who did not have the time to lug home heavy cartons from his Liang Court shop regularly.

For business owners, meanwhile, the subscription retail model helps them to concentrate their marketing efforts on a specified target group, as well as better collect data that will help them predict consumer behaviour. "The next level of e-commerce is in personalisation. And compared to traditional supermarkets, subscription programs are a two-way channel for marketing," says BoxGreen's Walter Oh. In their e-commerce site, to be launched in a month, subscribers will have a function to rate the snacks they've received, which helps Mr Oh and his partner Andrew Lim better curate the products that go into future boxes.

Others view the subscription model as an extension of their core business. Wagbox, a monthly surprise box containing pet toys and accessories, is a spin-off of online pet store, Furry Star; Intellibox and Vaby Box are subscription retail extensions of childhood development centre Thinkers Box and e-commerce site for new mothers Vaby. Like Thirsty's beer programme, Papa Palheta's coffee subscription and Eastern Granola largely cater to already loyal customers.

The good and the bad

Another operational benefit for retailers: subscription is a good way to push slow-moving products, admits Thirsty's Mr Utam. And that's not such a bad thing for consumers. He elaborates: "They are not necessarily inferior products, but maybe because of less attractive packaging, a higher price point or the lack of marketing, they don't appeal as much to customers when simply displayed on the shelf."

Businesses can also purchase in bulk at a better price and meet minimum order quantities with confidence once they've built up a sizeable subscription base, he adds. "When you can purchase according to their needs, you avoid the risk of holding inventory."

But while it sounds good, the reality is not all that rosy. There are no official numbers on subscription businesses in Singapore but dormant Facebook pages and websites bearing posts from two years ago hint at the scores of subscription box schemes that have come and gone. Email queries and phone calls to some of their order hotlines go unanswered. Some don't even list any contact numbers or founders' details so subscribers who may have paid up upfront are left without any recourse when these businesses shut down without a trace.

That is why PSLove's Mr Leow and co-founder Tan Peck Ying didn't want to start a frills-based subscription box, but a needs-based subscription retail scheme, which they believe to be more sustainable in the long-run.

"The fundamental challenge with surprise boxes is that it may be exciting to get the first few boxes, but after a while the novelty dies off. You have to set the bar higher and higher each time," Ms Tan observes. Needs-based subscriptions appeal to the pragmatic side of Singaporeans, he says, adding that PS Love currently has a 90 per cent retention rate.

Additionally, when a subscription service's membership base grows to more than 1,000 subscribers, companies can no longer sponsor that many sample products for free, he points out.

Theresa Shan of The Box disagrees. Though The Box's previous founders opted out of the business earlier this year, she and partner Marc Dass, who run wellness studio In The Loop together, decided to acquire it for an undisclosed sum as it tied in with the core values of their main business of promoting sustainable living and supporting small businesses. When their customer pool grows, they plan to diversify into boxes with different themes, such as a men's box or a box for sports lovers.

Other stumbling blocks are infrastructural challenges, such as the high cost of delivery in Singapore - especially for items that are heavy or have short shelf-lives - as well as the lack of cost-effective monthly recurring online payment arrangements, say box operators such as Boxgreen's Mr Oh.

"In the US, there are even businesses built around helping subscription services build their business. We are a few years behind," says Mr Oh.

Likewise, Thirsty's Mr Utama thinks subscription models make sense in the US "because it's such a large country and you may not be able to get what you want if you live in a small town in Tennessee with only one liquor store".

"But stores in Singapore are so accessible and so many products are imported so it's easy to get what you need," he says.

Issues such as lost parcels, delivery at wrong timings and poor service by mail providers are also hiccups beyond business owners. "We can only try to minimise such incidents by keeping our feedback channels open so we can rectify these issues immediately when they happen," says Ms Hoo of Intellibox.

When all has been said and done, The Box's Ms Shan is still hopeful: "It is a million dollar industry in the Europe and the US, so it's a proven model. You can't deny that."


 

Living it green

BoxGreen

www.boxgreen.co

Some people get mid-afternoon snack attacks in the office. The more enterprising among them turn those hunger pangs into a new business.

Bankers Walter Oh, 27, and Andrew Lim, 29, recall how the idea for BoxGreen, a subscription service for healthy snacks, came about. "We would get hungry at 4pm and we only had two options: walk for 10 minutes to buy snacks or get potato chips and chocolate from the office vending machine," says Mr Oh. "If I had to sit at my desk for 12 hours and eat chocolate and potato chips all day, I would feel horrible."

Launched in June, BoxGreen mails out its boxes on the second Monday of every month, and each box typically contains four to six snacks following a 80:20 mix of healthy tidbits, such as nuts, granola, fruit strips and cacao nibs and other superfoods, and "indulgent" snacks such as chocolates and cookies. Snacks are organic, additive and preservative-free as far as possible.

Apart from snacks by local food makers, the duo came up with an in-house line of original flavours such as a "cheng tng" trail mix with dried longans, wolfberries and lotus seeds, and an "almond longan jelly" mix of almonds and dried longans.

"Jason's supermarket has many interesting organic snacks but they're expensive, and a costly risk if you end up not liking them," explains Mr Lim. Each Boxgreen package is priced at S$19.90 (S$15.90 if you sign up for a year) but has a retail value of S$20 to S$30 worth of snacks that should last for 20 serves, or 20 working days in a month.

BoxGreen also packs door gifts for corporate events, and can customise giant boxes as incentive gifts or "mobile pantries", adds Mr Lim. About 200 boxes are sent out each month and they hope to eventually tailor boxes to individuals' preferences.

"The snack industry is estimated to be worth over S$20 million in Asia, the market is big enough," says Mr Oh. They hope to bring the service to other regional cities eventually.

The Box

www.boxbylohasia.net

Organic health food stores are a dime-a-dozen now, but if you have no time to suss them out individually, there's The Box, a quarterly curated subscription service for wellness-centric products. The service is run by former F&B exec Marc Dass and yoga teacher Theresa Shan, who also own In The Loop, a eight-month-old wellness showroom and studio for private yoga and dance classes.

Each box, mailed out quarterly, costs S$50 (S$40 if you sign on for a year) and contains at least eight items with a retail value of between S$150 and S$200 in various categories such as cosmetics, toiletries, food, beauty and wellness, including vouchers for free trial sessions.

The latest box, for instance, included a 250ml bottle of cold-pressed coconut oil from Pure and Sure, a 10-sachet packet of cold-brewed infusion teas from local company Infuusa, and a pack of cacao nibs from local brand Bruneus.

Not more than 300 boxes are sent out each time, and gifters can opt to leave personalised handwritten notes in each box. "It lets people become kids again. It's like Christmas comes four times a year now," laughs Mr Dass.

In keeping with the box's "try, love, buy" philosophy, the couple will also debut an e-commerce site next year to retail full-sized versions of their sample products.

"We're not going to be millionaires doing this," Mr Dass admits, as sustainability-conscious consumers are still a niche target market, and customer acquisition is tough. But the upside is that subscribers are more likely to be repeat customers as they already adhere to similar lifestyles, and even more commercial brands are launching sustainable product lines, he adds.

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