Georg Richter, founder and CEO, OceanX

Holiday shoppers broke records in 2018, spending $6.22 billion online on Black Friday and nearly $8 billion on Cyber Monday, according to data from Adobe Analytics. That’s up 23.6 percent and about 18 percent, respectively, from 2017 figures. And those aren’t just nice numbers to close out 2018 — they’re good signs moving into 2019, especially for the gifting segment.

But where does subscription retail fit into all this? How can brands that focus on recurring revenue and relationships take advantage of gift-giving, not just during the holidays, but all year round?

Popular relationship-focused retailers such as apparel retailer Stitch Fix and wine-focused service Winc likely play a role in gift-giving, whether during big holidays like Christmas or personal occasions such as birthdays and anniversaries. And for omnichannel retailers such as Sephora and Target, subscription offerings can help capture new business. The Sephora PLAY! beauty box and Target’s Cat and Jack kids’ apparel box both allow the retailers to compete in additional channels, and they have the added effect of focusing on recurring revenue and real customer relationships for the retail giants.

Plenty of gift options exist in the “subscription box” space, from hot sauce to handbags, but just because there’s a box for nearly everything doesn’t mean customers will buy more of them when they need to give gifts. Instead, retailers with subscription programs must earn more gift-related business by marketing their brands as gifts and making it easier for their customers to give subscriptions as gifts, which historically has not been the focus for many digitally native subscription brands.

Subscription Gifting Hurdles

Gifting a subscription-based product is a bit more nuanced than it might seem at first glance. First, let’s tackle payment. Is the subscription being gifted indefinitely? These boxes are billed monthly or quarterly, and the goal of the retailer is to keep a customer forever to maximize customer lifetime value.

For a gift box, when will the gift end and the billing of the recipient—as opposed to the gift-giver—begin? Subscription options such as the Book of the Month Club, Loot Crate, and Kiwi Crate all offer a variety of easy gifting options to address these issues, ranging from a single month to an entire year.

In my experience, however, many others consider gifting as an afterthought: Only after they set up their entire business operations do they decide to offer a gift option. They then have to figure out some of these tricky billing questions, and the platforms and technology they have in place may not be optimal for reducing payment-related churn.

Next, how will a recipient be notified of the gift? For some gift givers, an email would be sufficient, but others will want to be able to print out and wrap a physical gift. There is also the timing of the gift message. No one wants gift notifications to ruin the surprise.

Marketing is another important factor, and many subscription retailers offer incentives to their current members to gift subscriptions, whether it’s a surprise gift or a free month for the existing customer. But current members are only one channel, and if gifting is to become a larger part of the overall mix, then the gift option needs to be clear on the initial site visit as well as in acquisition messaging across other marketing channels.

Standing Out With Subscriptions as Gifts

To be successful in the increasingly crowded gifting arena during any holiday, big or small, you’ll need to find a way to deliver something exceptional. And in most cases, convenience alone won’t cut it.

So instead of focusing on convenience, subscription retailers must focus on what differentiates their programs from the competition and the massive selection, convenience, and pricing Amazon offers. Maybe the subscription provides the gift recipient with a curated selection based on their preferences, exclusive offerings available only to subscribers, or the opportunity to try exciting new products they wouldn’t otherwise experience.

For retailers, the subscription retail channel and gifting overall is gaining importance. Not only can they increase revenue, but they also can create a lasting relationship with customers that generates a wealth of valuable data about customers’ demographics and preferences. Still, the explosive growth in the subscription space has made it extremely competitive. To capitalize on the shopping craze that surrounds a holiday for any gifting opportunity, retailers will need to do everything they can to make giving a subscription gift more appealing.

OceanX provides a subscription and e-commerce platform.