Since the start of the pandemic in March 2020, there has been a boom in subscription services – both the establishment of them and the uptick in consumers who are availing of these services. Subscription services appear to have been an impetus for growth and stability during the pandemic, and have been able to break into new territories including beauty brands, cosmetic companies, bookstores, chocolate retailers and grocers. The ease that subscription services afford consumers is a driving factor in people signing up for them.
Saving consumers both time and money in the long run, subscription services are becoming the norm for consumers to receive goods and services. It begs the question, how many subscriptions are too many? It honestly depends on the individual consumer and the quality of the subscription. Are they having a meal kit delivered, and are they using all of the products from it before they expire? Are they receiving a beauty box, and sampling all of the items? When consumers can manage these subscriptions both monetarily and receive maximum value from them, there should be no concern about the shift towards a more subscription based world.
It is no surprise that free delivery is the most important consideration for consumers when making an online purchase, including a subscription service. Offering free delivery on a minimum spend threshold is a popular mechanism that is working well for retailers to entice existing customers to order more, as well as attract new customers to sign up to their services. The second most important consideration for online shoppers is fast delivery. With consumers accustomed to getting what they want, when they want it, retailers who offer a subscription service need to meet these demands, with some grocery subscription services now offering delivery within an hour from time of order placement to ensure these consumer demands are met.
The UK’s meal kit delivery services market, a pre-existing subscription service before Covid, Scurri has observed, through its partnership with Gousto, that there is a growing demand for healthy food ingredients to service the cook at home consumer trend that has maintained its growth even as the country reopens. In a growing marketplace like this, nothing is more important for the service provider than getting their delivery right the first time.
Over the last year, we have seen British households turn to alternative online food delivery services. For example, Gousto went from delivering 2.5 million meals a month to 6 million meals a month over the course of 2020, bringing them to a total of 53 million meals delivered during the last year. Gousto’s profit has more than doubled for the first time since launching in 2012, and two new fulfilment centres are confirmed to be opened by the end of 2022. When done right, the benefits of subscription services are profound.
It’s also worth talking about the cost of failure. Gousto sells dinner times. If you have ordered dinner time for your family off the internet and the box doesn’t arrive, it’s a painful experience for customers. Gousto’s need to get it right every time is crucial, and the reason why the company is concentrated on the uptime and the operational excellence of its technology. It requires a laser focus on ensuring systems are running smoothly – right from supply chain through to e-commerce. Gousto uses software to upgrade both the supply chain and the customer experience of cooking from scratch, while riding the permanent structural shift from offline to online.
As we have become more discerning about our lives and our own mental health needs, the same goes for man’s best friend. Pet owners have leaned into making their pet’s lifestyle more comfortable and enjoyable at home as well as their own. Shopping preferences for pets have also completely changed due to stores being closed. Pet owners turned to fast and easy eCommerce options. Pet owners who originally relied on commerce for safety reasons have now stayed with this purchasing practice for convenience even when stores did open back up. Some 3.2 million households have acquired a pet since March last year, according to the Pet Food Manufacturers’ Association, taking the number of pet-owning households to 17 million. Younger people accounted for almost two thirds of new owners. Supermarkets have warned of pet food shortages, and pet-related businesses’ sales are wagging.
Thanks to the increasing reliance on subscription and home delivery services, and especially the services that are highly customized, companies like Butternut Box don’t see this trend going away anytime soon. Families spent £6.9 billion on pets last year, according to the Office for National Statistics, up from £3.34 billion a decade earlier. Costs are rising, from luxury food and subscription boxes to daycare, clothing to the dreaded pet insurance bills.
As a retailer, understanding the cost of failure your product brings is very important to building your customer base, keeping costs down, and ensuring that the system continues to run smoothly. Retailers need actionable visibility and control over the full delivery process and how they communicate updates to their customers. Not only do retailers need to be able to see and access delivery data, they also need to be empowered to resolve service issues before they potentially become customer-facing nightmares, which in turn reduces the volume of ‘where is my order’ calls.
Fergal O’Carroll is the chief revenue officer at delivery management company, Scurri, with responsibility for sales strategy and execution.
His prior roles include EMEA vice-president for commercial sales with Teradata for eight years; prior to that, he was managing director of business intelligence solutions with Avnet Client Solutions for 13 years.
Fergal holds a BA in Business Studies from the University of West London and is a native of Dublin, Ireland.