4 Reasons Why Subscription Commerce is for the YAYA Market

Posted by on Feb 2, 2014 in Blog | No Comments

Birchbox CEO Katia Beauchamp insists her pretty subscription box scheme is more than just trendy cosmetic marketing. Beauchamp believes she’s burgeoning a new type of business all together –  called “discovery commerce.”

Birchbox isn’t the only one cashing in on this commerce explosion, either. Subscription Commerce, or “SubCom,” as it’s affectionately dubbed by supporters, has seen a boost in expansion – from Manpacks (men’s underwear and condoms), Barkbox (for dog owners), Conscious Box (gluten-free, organic and vegan lifestyle items), and even Loot Crate (for the geek and gaming savvy).

What makes subscription boxes so strategic is companies like Birchbox receive the sample products for free or low cost, charge customers a premium flat rate to receive them monthly and consequently reap conversion rates up to 50 percent on full-size product sales. SubCom shifts the paradigm of commerce drastically by giving the company the opportunity to educate and market to consumers to entice future purchases.

This type of commerce is based off the tried and true psychology that every customer wants to try before they buy. This notion couldn’t be more perfectly tailored for the YAYA market and here is why…

– The YAYA consumer loves brands and consumers love when brands and products tailor their messaging to them.

It’s imperative to have a conversation and engage with this demographic authentically in order for them to trust you. 70% of Millennials confess they always come back to brands they love, according to Edelman’s 8095 global benchmark study.  This speaks volumes and indicates that once your message has resonated with the YAYA market, they will reward you with fierce loyalty.

Each of the subscription services works independently different, but with the case of Birchbox, the company sends out 30 to 50 different types of customized boxes per month. The determination of products comes from answering surveys about your preferences, physical features, and interests. This type of tailoring really breaks through the clutter of advertising today and speaks to style-conscious young adults. In fact, Birchbox sells more than three full sized products per minute and has received over $11 million in funding to date.

– These shoppers love to splurge on themselves — especially for the sake of pampering.

The YAYA shopper is 54 percent more likely than any other generation to impulse buy for the sake of indulgence, states an Integer Group report. What defines luxury for this group is subjective, though, which is why customized subscription boxes are absolutely brilliant.

If luxury is ice cream, then Milkmade has the cream of the crop share. Milkmade is a subscription service that delivers handcrafted ice cream directly to your door monthly in offbeat flavors like Pop Tarts, Spiced Apple Cider Donut, and Salted Watermelon.

If luxury is unmentionables, then MeUndies has customers by the seat of their pants. MeUndies capitalizes on the fact that designer underwear sells for 10 times what it costs to produce them, by completely eliminating the middleman. This tactic resonates especially with the price-conscious YAYA consumer. The company delivers top quality comfy t-shirts, socks, and underwear for men and women to your doorstep.

– Young adults today are inherently more mobile and rely heavily on their social networks for advice, product reviews and incentives.

Subscription boxes have taken social media by storm. A quick search in YouTube will unearth an entire community of people who “unbox” or unwrap their boxes and record their first impressions for the world. Not only do most of these companies have an extremely strong social media presence, but they also dabble in content marketing, by pushing tutorials, how-to’s, blogs and even customized discounts for more swag as an incentive for sharing reviews. The YAYA consumer is entrenched in social media and in fact, 54 percent of females and 44 percent of males use Facebook and Twitter to receive notices of upcoming sales, specials, and discounts.

These monthly sample boxes are strategic in that they provide an important unique selling point: convenience, to an active consumer. The Dollar Shave Club recognized there was an unmet need in the market and went viral on social media with their exclusive proposition to ship a tier of different men’s razors monthly. Men can “shave time and shave money” by choosing between a $1, $6, or $9 monthly pack of razor cartridges tailored for different needs – including the “lover’s blade” which is a gender bender in a single stroke.

– YAYA consumers value loyalty programs more than generations that came before them.

Research by Marketing Pilgrim uncovered that 77 percent of Millennials are active participants in loyalty programs and are more apt to buying in to reward-oriented initiatives. These tech-savvy consumers are also 50 percent more likely to use social media to promote and show off the rewards they’ve earned from a loyalty program.

SubCom companies insist they’re not merely a subscription program, but a membership service. Their commerce sells itself and doesn’t lie or die by the boxes’ success, but actually succeeds at creating a seamless transition from trying to buying.

What subscription boxes do for consumers is create an undeniable level of exclusivity in consumerism.

The CEO of Naturebox, a monthly membership box stocked with nutritionist-approved and picked snacks, speaks to this sentiment to CNN.

“Whereas the first wave of e-commerce was very much centered on products you could buy anywhere, with sites like Amazon,” he says, “I realized the second wave of e-commerce would be centered on products you couldn’t buy elsewhere.”

Millennials are experiential beings and love when brands make them feel like experts and trendsetters. Brands that get this understand that these finicky consumers are driven by personalization, recognition and even the opportunity to become an influencer themselves. Millennial shoppers are 31 percent more likely to be swayed by discounts earned from loyalty programs than the average shopper, according to a report by Bazaarvoice.

If you want to nab the YAYA market — get them into a box. A marketer’s deeper understandings of these concepts are almost always rewarded with loyalty… which inevitably equals big dollars from the most powerful spenders of today.

(see original MOJO Ad post here)


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