Why ‘subscription-first’ is a buzzword amongst D2C players

It’s a busy life for Mumbai’s Arushi, amidst the hustle and bustle of the city. The 24-year-old, who lives alone, is always swamped with so much work that she often misses stocking her fridge with daily essentials.

One day she came across a D2C brand on Instagram, that delivers her daily essentials every day without her even having to order them. All she had to do was subscribe and be it bread, a milk packet or eggs, they would be at her doorstep every day for the period that she had signed up for.

Arushi’s experience is not unique anymore. Across the nation, D2C brands like Country Delight, Furlenco, OZiva, Sleepy Owl and more are transforming the customer-brand relationship through subscription models. Several D2C brands are discovering that in an age of constant digital bombardment and impersonal transactions, forging genuine connections with customers is the key to longevity.

Buzz Around 'Subscription-First' Approach

D2C-focused digital agency The Starter Lab’s founder Kartik Khanna says that ‘subscription-first’ seems to be the buzzword now in the D2C category. “Not only flat subscription, but D2C brands are now being more intelligent and going in for tiered subscription models as well,” he added.

The tiered subscription trend is picking up purely because it is more than just about convenience with regards to saving time, experts suggest. They say that it is equally important to give a level of flexibility to consumers and provide them with incentives from time to time, throughout their journey with the brand.

The catch here is to rightly identify at which stage different consumers are in their subscription journey, so as to tweak the pricing strategy across tiers.

Shubham Shrivastav, AVP D2C Pro, shared that tier 1 cities are the first to be adapting to the subscription-based model quickly. “Majority of the working class want the ease of getting the product timely, and don’t want for orders to come in delayed,” he said.

One might then ask what’s slowing down the tier 2 and 3 cities to adapt to this model. Shrivastav explains that tier 1 consumers see a larger deficit of time. “The new generation there doesn’t want to spend time on going to stores and purchasing. However, in tier 2 & 3 cities, it is not that the consumers are sceptical about subscriptions, but are generally more connected to their local stores,” he believes.

Expanding Horizons: Beauty & Personal Care Segment

While subscriptions have been majorly popular for brands catering to daily consumption needs (veggies, fruits, dairy etc.), the beauty and personal care segment seems to be making its way up on the chart as well.

Khanna explains that if someone is using a hair supplement or is consuming some kind of protein supplement, the chances of them converting to subscriptions tend to be higher. The likes of OZiva, Plix and Kapiva can be considered under this category, which majorly focuses on personal care and offers customised plans for a fixed period.

Apart from supplements, even the cosmetics space is gearing up to leverage the model. 

Dheeraj Bansal, Co-founder of cosmetic brand Recode Studios says that several elements determine whether the industry as a whole is fully ready for such a model. Whether or if consumers in the cosmetics sector are interested in subscription services is one of the important elements.

“There is an increasing industry trend toward customization and sustainability, which can make subscription models appealing to some customer groups who regularly need carefully picked eco-friendly options,” Bansal said.

Along with the rising trend of subscriptions, the trend around consumers’ willingness to experiment with new brands is also on the rise massively, especially in the D2C beauty and personal care space. 

Bansal feels that this willingness to experiment may make the consumers less likely to sign up for subscription services.

Achyut Daga, General Manager - Marketing, The Mom’s Co, echoes a similar opinion and says that on the face of it, beauty and personal care subscription seems a difficult idea to digest since India is a trust economy and BPC consumers like to experiment with their choices. “Makeup, haircare and face care are categories that see high levels of experimentation and consumers are always looking for the next novelty product,” Daga mentioned.

He says that while subscription models might be difficult for a stand-alone brand to run, one way of making this work could be via subscription models run by a group of brands. “It allows consumers to enjoy the best of both trust-based shopping and the thrill of experimentation, all while reaping the conveniences and benefits of a subscription service,” Daga added.  

However, Shrivastav mentioned that FMCG will eventually be the key driver for the subscription economy. “As for other industries, I’d still say that the recall of a subscription model would be very less,” he said.

Path to Customer Loyalty

Be it any industry, the core purpose of deploying a subscription model is when brands seek customer loyalty and want to build on retention. With consumers being open to trying new brands as and when they feel, retention is a task.  

Khanna believes that a subscription model is one of the easiest ways to make sure that the brand is tapping into customer retention. He shared that this can further be enhanced by personalising the experience for the consumer.

He explains, “For instance, if a consumer is subscribed to protein supplements, why not send a recovery product with the next month’s delivery along with a note? This is possible today, given that the brands are able to leverage the data very well.”

Experts thus opine that subscriptions can be a good way for D2C brands to retain consumers and gain their trust, provided they are efficiently able to overcome the difficult part – conversion from one-time purchase to subscription!