Subscription and direct-to-consumer (DTC) e-commerce is booming, fueled by the social-driven economy, consumer demand for convenience, and a culture of "I want it now."
Between April 2014 to April 2018, the industry underwent 890% growth, surging over 200% annually, on average. That growth has translated to big money: Subscription sales skyrocketed 4,461% from 2011 to 2016, with the biggest brands in the business raking in over $2.6 billion in sales, up from just $57 million at the beginning of the five-year period.
Although the subscription and DTC models are distinct—a DTC brand doesn't have to be subscription-based—both benefit from the same advantages of technological and cultural developments:
- Widespread social media use by consumers, and as a result easy, direct, and often inexpensive access to those consumers via rich targeting
- Access to unprecedented consumer behavioral data that was once lost in the traditional, third-party distribution models
- Consumers' willingness to pay a premium for "right now" delivery, convenience, and curation
- A general culture of laziness that has consumers unwilling to actually leave the house and stroll through stores (DTC and subscription services simplify the surplus of choice and take the decision-making out of shopping.)
Market conditions certainly favor DTC and subscription services, but with new entrants popping up every day—including big brands like Nike getting in on the action—the industry is evolving quickly.
What will that mean for the market heading into 2020? Here are five trends to watch.
1. More Brands, More Products
More than half (54%) of online shoppers have subscribed to a subscription box service, so there's little doubt we'll see more items and brands shifting toward that model. There's already a wide selection, including personalized vitamins, razors, pet toys, toothpaste, and even athletic apparel and shoes.
In reality, virtually any product or service can become subscribed, and I expect we'll see some fun and creative new entrants.