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The rise of the subscription: how Gen Z is changing the way we consume new products

by Shelley Mole
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    Subscription services are nothing new, but as they evolve they are becoming one of the fastest growing consumer trends. So, what makes a monthly ‘mystery box’ so appealing to Gen Z, and how could a subscription-based approach potentially impact the business to business space?

    Subscription e-commerce services are soaring, with over 100% growth each year for the past five years, and 15% of online shoppers signing up to at least one service in 2018. As a consumer, there have never been so many choices or accessibility to brands, and subscription boxes offer a great way to have a taster of all sorts of products before committing. For Gen Z, who grew up with TV on demand, Netflix, and next day delivery, subscription services are the norm; whereas previous generations remember the sting of a disastrous DVD rental, Gen Z has always been able to simply choose another film.

    Given the level of choice Gen Z has grown up with, it is understandable that they expect the way they consume everything to be ‘On Demand,’ and that they are reluctant to commit to a new product (or movie) without the opportunity to sample it first. Monthly subscription boxes indulge this desire with their ‘try before you buy’ approach, with beauty boxes like Birchbox sending sample-sized products which you can go on to purchase if you love them, the perfect way to discover your new favourite eyeshadow.

    But it’s not just the understanding of ‘On Demand’ life that makes beauty boxes so popular; the carefully placed and very Instagram worthy branding is also a big hit. Every Birchbox comes in immaculate, themed packaging, and the brand encourage User Generated Content by asking recipients to share their goodies on social media and offer free gifts when you leave a review. With ‘real customers’ praising their boxes online, brands like Birchbox establish trust and interactivity, which is vital for Gen Z to shop with a brand.  

    Loyalty schemes also play a huge part in the retention of Gen Z consumers, for whom added value plays a huge part in their consumer habits. Again, Birchbox gets this right, by automatically making all subscribers ‘Birchbox VIPs’ after 6 months, providing they don’t miss a month. All this really means is a slightly better discount code (15% rather than 10%) but being part of the inner sanctum plays to Gen Z’s desire for inclusivity and belonging.

    It’s not just beauty that can land on your door mat each month, with coffee and book clubs, sports merchandise, so-called ‘geek gear’ and even a monthly Harry Potter mystery box available. Each of these indulges Gen Z’s love of fun and whimsy. Whilst they may be less practical than cosmetics, Gen Z place an incredibly high value on self-care, and things that bring them joy tick this box.

    Besides the fun, some subscription boxes are far more useful, and the success of monthly razor delivery brands like Dollar Shave Club and Harry’s Razors are testament to the way e-commerce is headed. For a small monthly fee, subscribers receive brand new razor blades in the post, along with any add-ons they would like (shaving cream, deodorant, etc.) and some carefully branded freebies. ‘Clubs’ such as these are purely practical, yet they still offer that same feeling of joy receiving a parcel which has never been experienced stood in the queue at a pharmacy. Convenience drives its success, with Apps allowing you to alter the frequency of your deliveries at the touch of a button. For a generation passionate about technology and streamlining processes, paying a little more for better service will always appeal.

    Given this normalising of subscription services in our day-to-day lives, it’s expected that the same approach will cross over into the business to business space.

    For example, where B2B companies have traditionally focused on selling one main product or service, a subscription-based approach could result in a more cost-effective way of accessing unlimited products or services, providing a more predictable revenue model.

    Gen Z view their personal and professional spheres as a holistic model; brands that want a piece of the emerging economy must adapt and accommodate the change that is coming. For the Netflix generation, choice and flexibility is vital, and B2B offerings are likely to catch up.

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