The major focus areas considered while analyzing and defining the penetration of subscription e-commerce includes application segment (beauty and personal care, food and beverage, clothing and fashion, healthcare and fitness and entertainment), end-user segment (women, men and kids) and payment mode segment (online and offline). In 2018, the beauty and personal care application dominated the global subscription e-commerce market with the maximum share of 29.6% in terms of value. Growing demand for glam, convenience as well as number of players flocking themselves into beauty arena would help the segment to grow at a faster rate of 84.3% during the forecast period (2019-2028). However, with the strengthening e-commerce and surging trend of online shopping, other areas such as clothing and fashion, food and beverage, healthcare and fitness and entertainment are also anticipated to register highest CAGR over the forecast period.
Subscription boxes or subscription-based business model refers to a recurring delivery of products as part of a marketing strategy and a method of product distribution. With a target to cater to wide range of customers portfolio with their specific needs and specifications, it is estimated to continue its double-digit growth in years to come. It has been further estimated that that there are 400 to 600 different kinds of subscription boxes in the United States alone and more overseas. They aim to facilitate the consumers with an easy, personalized and cheap way to purchase their products as per their requirements. Moreover, increased exposure to new products in different applications ranging from beauty and apparel to toys, books and pet food has significantly supported huge consumer base to discover optimal products for their preferences and needs. Although being at nascent stage as well as being a niche segment of e-commerce domain, it is anticipated to capture sizeable chunk of e-commerce market.
Subscription e-commerce business has been booming owing to several factors apart from convenience and cost efficiency. It has been observed that more than 12% of the existing online shoppers have signed up for one or more subscription services. Modern lifestyles and changing consumer behavior, as well as accelerating disposable income and the assurance to deliver quality services thereby leading to positive user experience has tremendously flourished the market potential in recent years.
Moreover, proliferation of internet services and smartphone penetration coupled with augmenting working population has substantially catalyzed the market performance of subscription business across the globe Considerable rise in venture capital investments along with surging number of visits has proliferated the industry growth. Furthermore, as the subscription-based business models have become a part of everyday life for consumers, curation-based subscription boxes comprising clothes, beauty products are the most popular kind of subscriptions. Curation boxes purpose to surprise the consumer with individualized experiences in diverse categories such as food, apparel, beauty and others. To add on, surging technological advancements and burgeoning demands for online shopping, software applications and providers have also enabled the consumers to delay, modify, scale up or scale down their subscription orders. However, overbuying issues, privacy and security concerns, unclear value, unclear return policies tend to hinder the market growth.
Moreover, in 2020, women subscribers held a prominent share of 54.6%, followed by men and kids’ subscribers. The women subscription e-commerce market at global scale was valued at US$ 18,949.4 million in 2020 and is projected to witness astonishing CAGR of 70.8% during the forecast period. In addition, men subscribers held around 31% market share in the respective market on account of surging demand of products such as razors, shaving creams and other men grooming products over the years. Hence, the segment garnered revenue of US$ 10,750 million in 2020. While online mode of payment captured the lead share of 69.6% during 2020 attributed to surging government initiatives in terms of cashless economy and rapid digitization.
To conclude, subscription e-commerce business has been growing at a very accelerating pace due to growing number of consumers signing up for various subscription services. It has been observed that the market size as well adoption rates are reaching all-time highs. Ranging from beauty products to health care and fitness subscription kits to pet food, the subscription-based services aim to offer end to end solutions to the end users. Global Subscription e-commerce market generated revenue of US$ 34,713 million in 2020 and is expected to reach US$ 2,6453,580 million by 2028 experiencing robust CAGR of 72.9% over the forecast period (2021-2028).
Also, for better understanding of subscription e-commerce market, detailed analysis has been conducted for different regions along with their countries including North America (US), Europe (UK, France, Nordics), Asia Pacific (China, India, Japan), and rest of the world. The Rest of world includes regions such as Latin America and Middle East. Based on the estimation, North America dominated the global subscription e-commerce market, accounting for revenue share of 65.5% in 2020. On account of majority of subscription-based companies being in North America and huge awareness among the developed countries such as United States about the subscription-based services has significantly fostered the regional market.
Numerous companies have earmarked their presence in the global subscription e-commerce market and continue to focus on business expansions, product expansions, surging investments and collaborations, for instance, Ipsy, Birchbox, Dollar Shave Club, Stitch Fix, Hello Fresh, Blue Apron to name a few. They continue to offer wide range of subscription boxes that cater to consumer needs and specifications in various domains that further resulted in escalating visits on subscription websites. Furthermore, emergence of various startups in beauty and personal care, healthcare and fitness domain along with growing demand for creative subscription boxes for kids has further influenced the market growth. With an objective to stimulate the signups for subscription boxes across the developing nations and developed nations, these players have adopted various strategies to enhance the penetration of such business model. Some of the major players operating in the global subscription e-commerce market include Dollar Shave Club, Inc., Blue Apron Holding Inc, Personalized Beauty Discovery, Inc. (Ipsy), Hello Fresh, EdgeWell Personal Care (Harry's), PetSmart, Inc., Netflix, Flintobox, Nature Delivered Ltd (Graze) and The Walt Disney Company.