Since May, Gap Inc. has quietly been testing a quarterly subscription outfit box for babies called babyGap Outfit Box.
The apparel retailer, No. 24 in the Internet Retailer 2017 Top 500, started the program with a limited number of loyal babyGap customers, however, the retailer has since made the program available to anyone, a Gap spokeswoman says without revealing specifics.
The outfit box is $70 and contains six, seasonally-relevant baby apparel items that are valued at more than $100, which means the outfits are discounted roughly 30%-35%. A shopper picks a size, gender and theme for the box, such as “classic,” “newborn essentials,” “fun” or “surprise.” Gap charges the customer when the order ships, however, a shopper has 21 days to decide if she wants to keep the items. Shipping and returns are free, and the box arrives every three months. A shopper can change the box’s theme for each quarter, and the baby’s size automatically updates with each box.
The goal for the box is to help shoppers find new outfit ideas for their children, the spokeswoman says. She would not say how the new box will impact sales or how long the test will last.
In May, Gap emailed a number of its frequent baby Gap customers letting them know about the service that had launched. However, anyone can sign up for the service on Gap’s website, and the retailer now promotes the babyGap Outfit Box on its social media pages, on its site and in emails in hopes of attracting new customers, the spokeswoman says. She would not say how many shoppers have tried the service.
Themed apparel boxes are gaining in popularity as other retailers are launching similar services, such as Amazon.com (No. 1 in the Top 500) with its Prime Wardrobe try-before-you buy box, and web-only retailer Stitch Fix (No. 134, and generated $730 million for the fiscal year ending in July 2016, according to the merchant) exclusively sells subscription outfit boxes.
Subscription boxes are attractive to apparel retailers because they foster a customer relationship, give the retailer customer insights and provide predictability in revenue, says Lily Varon, an analyst at Forrester Research Inc. While in theory this could work, there are several reasons that subscription models don’t always pan out, she says.
“Subscription theme boxes aren’t an immediate gateway to customer loyalty,” Varon says. “It’s a bit of a chicken and egg problem. A retailer wants to know more about its customers so they build a subscription model, but without knowing its customer, its shooting in the dark for what the right offer might be.”
Moreover, the novelty of a themed box wears off over time and customers often cancel, Varon says. Subscription-management platform Recurly examined a sample of more than 1,200 subscription businesses to determine churn benchmarks, concentrating on churn rates by industry type and price points. In its 12-month study, it found the median monthly churn rate across all data points was 6.73%.