By Joey Moore, Senior Director of Product, Optimizely
After 18 months of varying lockdowns and social distancing mandates, countries all over the world are now finally beginning to open up once again. While the easing of such restrictions presents an enticing opportunity for shoppers to shut down their browsers and apps and make a return to the physical store, consumers are still likely to continue making their purchases online as they have habitually shifted to the convenience of shopping from home.
According to recent research from PwC, Covid-19 and its associated lockdowns have driven a historic and dramatic shift in consumer behaviour, and the online shopping trend is only set to continue. Last year, it was forecasted that UK consumers will spend £141.33 billion online this year, up a massive 34.7% from 2019. This significant increase will see ecommerce account for more than 30% of total retail sales in the UK for the first time.
The rise of the subscriptions box
Another trend we’ve seen over the last 12 months as a majority of us started to embrace the convenience of online shopping is the rise in subscription-based retail models.
It’s safe to say that the UK has become a nation of subscribers — whether it’s wellness apps, snacks or houseplants, the ease of receiving a product or service on a continuous basis has won us over. According to Deloitte, 16% of 25 to 34-year olds in the UK are now signed up to three or more subscription services, and this has only increased since the pandemic.
Subscription-based retail certainly isn’t anything new. Brands like HelloFresh, Graze, Birchbox and BarkBox have been dominating the space for years. But over the last year we’ve seen brands quickly jump on the trend to serve convenience-hungry shoppers, including Hotel Chocolate.
Subscription boxes were traditionally used as a way for non-essential retailers, like health and beauty brands for example, to generate new revenue streams and build customer loyalty. With a majority of us relying heavily on digital channels to purchase items over the past year, those selling essential goods have used this as an opportunity to break into the subscription-based retail space — including meal kits, groceries and toiletries.
Running the subscription gauntlet
For those retailers who suffered significant losses and profit damage as a result of Covid-19, subscription services can act as a powerful tool to help increase sales and customer engagement. Despite the many benefits of this approach, joining the subscription-based retail bandwagon is no easy feat.
The subscription-based retail market is crowded with established and extremely successful brands, which means those who want to get a share of the subscription-based retail pie must ensure they can stand out from the competition in order to win the race.
The subscription retailer’s secret weapon
So how can retailers successfully create this competitive edge and attract new customers? Enter experimentation.
Retailers need to understand which of their offerings are most popular. Without continuous experimentation around what to send and when, retailers will be left in the dark. It’s therefore important to focus on implementing an experimentation culture across every retail strategy.
However, this isn’t just a one-off, tick-box exercise. Once a new subscription-based service has been launched, retailers must continue a programme of ongoing testing to understand which particular areas need improvement and which ones are performing well across the digital customer experience.
Once testing has been carried out, retailers can use experimentation to then make any necessary adjustments, whether it’s trying out different product pricing or altering the checkout or basket page to increase conversions.
Personalising the experience
Retailers have used personalisation techniques to boost customer loyalty for a while now. Those who are new to the subscription-based retail space now have an even larger opportunity to embrace the true power of personalisation.
Thanks to digital experience platforms, retailers can now access more insightful customer data than ever before. This data allows them to gain a more comprehensive understanding of consumer behaviours across each stage in the customer journey, and which areas can be personalised to grow sales and achieve better business outcomes.
Successful personalisation requires optimising the digital customer experience. Through experimentation, retailers can achieve a better long-term impact that resonates with customers, whether it’s the type of content they’re seeing on the site or the product pricing. Ensuring that this is a continuous process is key — personalisation must be an ongoing journey that has the ability to keep up with today’s consumer requirements and preferences.
Subscription-based retail can offer many benefits for retailers, including a consistent revenue stream and a significant boost in customer loyalty. Retailers must focus on embracing experimentation and optimisation if they are to stand out above the crowd and succeed.