Lily Varon, analyst, Forrester
Retail subscription boxes have a churn problem—that’s the bottom line. For non-essential categories, once the novelty wears off, consumers leave. We’re seeing subscription box companies burn through their addressable markets. If there’s a death knell for today’s subscription box companies, it’s not Amazon’s new Prime Wardrobe offering, it’s that many of them have been short-sighted. They have no game plan to maintain their value proposition after the novelty of their initial product or service wears off.
Here’s what subscription box retailers, or retailers considering a subscription box model, should take away from Amazon’s Prime Wardrobe announcement:
- Amazon continues to build out the value they give to Prime members. Amazon isn’t letting Prime members become desensitized to the value of their subscription. This service isn’t innovation per se, rather it’s a value-add for existing subscribers for no additional cost. Amazon is a building out the value of a Prime membership for its members.
- Amazon’s fashion shopping experience isn’t good enough to sustain this for the long haul. Today, Amazon requires fashion shoppers to exert a significant amount of energy to get value. The company has been making improvements, but buying fashion on Amazon is still generally a slog of basic product images and wonky product descriptions. It’s possible that Prime Wardrobe will give consumers the confidence to take a chance with items they otherwise wouldn’t have dared to order, but the company will have to fix the shopping experience to keep fashion customers shopping. It’s possible that Amazon wants to capitalize on the treasure-hunting crowd that has sustained TJX Companies, but to date that has been a distinctly offline shopping behavior.
- What’s conspicuously missing from Prime Wardrobe: personalization. Will Amazon use the information on customers’ history with Prime Wardrobe—requests, purchases, brand preferences, etc.—to personalize the experience for them going forward? That’s where StitchFix is placing its bets—creating a personalized experience for its subscribers. While Amazon could gather a mountain of customer data with Prime Wardrobe, personalizing shopping experiences still has its hiccups (e.g. you buy a baby shower gift once, and after that you get a barrage of baby product recommendations).
The Prime Wardrobe announcement raises the question of what will become of StitchFix, et. al.? Prime Wardrobe isn’t a knock-out offering. StitchFix and their competitors have a shot of survival if they continue building out their value proposition beyond the box service. For example, BarkBox has a subscription box, an e-commerce site, a content business, and an events business.
Let’s be clear: Fashion is a higher-margin business than consumables, StitchFix is profitable, BarkBox isn’t yet. But BarkBox is doing a better job building an ecosystem around their box subscription than StitchFix is today. Ultimately, subscription box services won’t fail because of Amazon—it will be a failure to evolve their long-term value proposition beyond the box.
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