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Subscription Box Market - UK Trends by Hitwise

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Subscription Box Market - UK Trends by Hitwise

  1. 1. | 1 Subscription Boxes UK Trends Jellyfish Connect 22nd February 2018
  2. 2. | SAMPLE SIZE 3M+ online panelists 1.5M+ mobile devices DATA DEPTH 9 M websites 160 M Keywords 20,000+ consumer attributes DATA FREQUENCY From Hourly Insights Through To Yearly Trends About Us 2
  3. 3. | 3 Agenda 3 1. Industry Overview – top trends in 2017 2. Audience profile – Who is the sub box subscriber & what are their needs 3. Collaborations– Zoom into Birchbox 4. Takeaways & Predictions for 2018
  4. 4. | Industry Overview Top trends in 2017 1.
  5. 5. | 5 The sub box industry is one of the fastest growing retail verticals, rising by 30% in online visit traffic over 2017 YoY. Source: Hitwise, based on custom industry of 170 leading subscription box providers. Total Online Visits By Year 43.3 million visits 59.0 million visits 76.7 million visits+30% +36%
  6. 6. | 6 Source: Hitwise, based on custom industry of 170 leading subscription box providers. 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2017 2015: 4.5 million visits in Nov & Dec. Dec slight higher by 2% 2016: 5.8 million visits in Nov & Dec. Both months on par 2017: Nov overtakes Dec by 12%, reaching 8.6 million visits In 2017, activity had shifted to November, as Black Friday became more widespread in retail. Total Online Visits By Month
  7. 7. | 7 Source: Hitwise, based on custom industry of 170 leading subscription box providers. Dots highlight peak month. This shift was largely driven by the Fashion & Beauty category, extending promotions from Cyber Week to Xmas Week. Total Online Visits - Categories By Month 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2017 Fashion & Beauty Food & Alcohol Lifestyle Fashion & Beauty: 2017 traffic grew by 34% YoY, Nov 21% higher than Dec. Food & Alcohol: 2017 grew by 25% YoY, Visits in Nov & Dec on par. Lifestyle: 2017 grew by 26% YoY, Visits in Nov & Dec on par.
  8. 8. | 8 Each category has its dominant players (the Top 3 accounting for 60%+ of category traffic), but top risers are gaining traction. Source: Hitwise, Visits in Q4 (Oct, Nov, Dec). Based on custom industry of 170 top subscription box providers. * Traffic based on visits to main domain. ** Based on relative difference, for top 20 players. Top Players & Risers in Q4 2017 By Online Traffic Fashion & Beauty Look Fantastic * Harry’s Birchbox Harry’s Not Another Bill This is Powder Food & Alcohol Abel & Cole Riverfood HelloFresh The Goodness Project The Mindful Chef Beer 52 Lifestyle Tails Blurt It Out * Butternutbox The Happiness Planner Butternut Box Protect My Pet Top Players Top Risers **
  9. 9. | 9 The growth among top risers is linked changing consumer interests, as searches shift to niche interests and occasions. New Keywords around Sub Box Searches Q4 2017 YoY Fashion & Beauty “Bath” “Wedding” “Bridal” “Brooch” “Perfume” Food & Alcohol “Gin” “Wine” “Recipe” “Vitamin” “Supplement” Lifestyle “Fitness” “Crochet” “Gym” “Gaming” “Scrapbook” Source: Hitwise, 12 rolling weeks to 30-Dec-2017. New keywords around the search term “subscription box”, vs. same period previous year.
  10. 10. | Audience Profile Who is the sub box subscriber & what are their needs 2.
  11. 11. | 11 3.1 million people visited a sub box site in Q4 last year, a rise of 18% YoY. What do they look like? Source: Hitwise, 13 rolling weeks to 30-Dec-2017 YoY. Visitors to 170 leading subscription box sites. Sub Box Shopper in Q4 2017 18-24 yo 16% more likely Female 10% more likely South East & South West 7% more likely PI sub-20K or over-50K 3% more likely Largest Rise YoY 45 yo + 40% rise Males 125% rise London & East 28%+ rise PI 40-50K 72% rise
  12. 12. | 12 The sub box audience are fashion-conscious, ethical and influenced by celebrities and external recommendations. Source: Hitwise and Kantar TGI, 13 rolling weeks to 30-Dec-2017. Visitors to 170 leading subscription box sites. What does the Sub Box Shopper care about? “I spend a lot on clothes” “I like to stand out in a crowd” “I prefer eating vegetarian” “I feel reassured using products recommended by experts” “I buy fair trade when available” “I’m easily swayed by other people’s views” “Wearing make-up makes me more self-confident” “Celebrities influence by purchase decisions”
  13. 13. | 13 But there are differences by sub box category, including audience demographics and attitudes. Source: Hitwise and Kantar TGI, 13 rolling weeks to 30-Dec-2017. Fashion & Beauty 18-24 yo Female PI Sub-20K Enjoys experimenting with make-up to change appearance Keeps up with the latest fashion Food & Alcohol 18-34 yo Female, Male PI 50-75K Often snacks on the move, rather than eating a proper meal Would pay more for quality wine Lifestyle 18-24, 55+ Female 0-10K, 75K+ Prefers holidays off the beaten track Changes home décor as often as possible
  14. 14. | 14 There is also growing audience overlap between categories, particularly Fashion & Beauty subscribers with Food & Alcohol. Source: Hitwise, 13 rolling weeks to 30-Dec-2017 YoY. Horizontal % shown in above chart, e.g. 13% of people visiting Food & Alcohol Subscription Sites also visited Fashion & Beauty Subscription Sites. Lifestyle Fashion & Beauty Food & Alcohol 2%10%- 3%-13% -13%15% Fashion & Beauty Food & Alcohol Lifestyle +19% +16% +15% +14% +6% +1%
  15. 15. | Collaborations Zoom into Birchbox 3.
  16. 16. | 16 Birchbox regularly collaborates with brands across different industries, from publishing, design to gifts. November 2017 Birchbox X Vogue December 2017 Birchbox X Matthew Williamson January 2018 Birchbox X Ohh Deer
  17. 17. | 17 In the month of the collaboration, each brand received a huge uplift from Birchbox audiences, especially Ohh Deer. Source: Hitwise, each month based on 5 rolling weeks. Audience = visits to / searches of featured brand. Chart shows ratio of Online Population or Birchbox Audience also visiting/searching for collaborator brand. 1.1% 8.9% 1.2% 11.1% Online Population Birchbox Audience Vogue Audience Pre-Collab (Oct-17) During-Collab (Nov-17) 0.0% 0.2% 0.0% 0.3% Online Population Birchbox Audience Matthew Williamson Audience Pre-Collab (Nov-17) During-Collab (Dec-17) 0.1% 1.0% 0.1% 3.6% Online Population Birchbox Audience Ohh Deer Audience Pre-Collab (Dec-17) During-Collab (Jan-17) Audience Overlap per Brand Pre vs. During Month of Collaboration +25% +6% +59% -38% +267% +3%
  18. 18. | 18 Birchbox also benefited, seeing an equivalent uplift from each brand’s audience. Source: Hitwise, time period for pre-collab and during-collab varies per brand (refer to previous slide). Audience = visits to / searches of featured brand. Chart shows ratio of Each Collaborator’s audience also visiting/searching for Birchbox. Audience Overlap for Birchbox Pre vs. During Month of Collaboration 1.6% 3.4% 3.2% 2.0% 8.6% 11.3% Vogue Audience Matthew Williamson Audience Ohh Deer Audience Pre-Collab During-Collab +26% +156% +251%
  19. 19. | 19 But what audiences did both sub box and collaborator gain? Let’s look at Birchbox X Ohh Deer pre-collaboration. Source: Hitwise, Pre-collaboration = December 2017 (5 weeks to 30-Dec-2017). Audience = visits to / searches of featured brand. Birchbox and Ohh Deer Pre-Collaboration Birchbox 110,300 audience size Ohh Deer 33,300 audience size Birchbox X Ohh Deer 1,000 audience size 91% more likely to be Female 25-34 yo 9% more likely to earn 30-40K 20%+ more likely from London and East 84% more likely to be Female 18-24 yo 10% more likely to earn sub 20K 10%+ more likely from London and Scotland
  20. 20. | 20 Comparing pre (Dec) to during (Jan) collaboration, Birchbox and Ohh Deer’s combined audience almost quadrupled. Source: Hitwise, Pre-collaboration = December 2017 (5 weeks to 30-Dec-2017). During-collaboration = January 2018 (5 weeks to 03-Feb-2018). Audience = visits to / searches of Birchbox and Ohh Deer. Birchbox X Ohh Deer - Combined Audience Pre vs. During Collaboration 51% 20% 17% 40% 56% 37% 18% 56% 25-44 yo Male London PI 20K-40K Pre-Collab During-Collab Combined audience shifts older, more male, London based, with higher personal income. Combined Audience Size PRE: 1,000 POST: 3,900
  21. 21. | Takeaways & Predictions 4.
  22. 22. | 22 Trends for 2018 1. Sub boxes will continue to grow More retailers and more verticals will participate, particularly with niche offers 2. Sub boxes will strengthen their brand partnerships More players will try to collaborate with the best brands 3. As the market and audience matures, Personalisation will become even more important
  23. 23. | 23 Risks for 2018 1. Offer overload 2. Growing competition in sourcing brands 3. Consumer fatigue, leading to high churn
  24. 24. | 24 Key Takeaways 1. Target new segments online: which audiences do you want to acquire, what are their interests, and what is their digital footprint (e.g. search, content) 2. Loyalty is king: track your audience’s needs and interests (what do they care about), ensure these needs are met and have a regular feedback loop 3. Get ahead of the curve sourcing new brands and offers: track fast moving trends (e.g. visits, search, social) 4. Ensure collaborations have a two-fold purpose: delight existing customers and open your brand to new segments 5. Have the right metrics to track success: regular KPIs such as audience overlap, profile and competitive benchmarking, pre vs. during vs. post collaboration
  25. 25. Thank you B e c k y P o s t l e t h w a i t e b p o s t l e t h w a i t e @ h i t w i s e . c o m 0 7 8 1 7 1 7 4 0 3 7

Editor's Notes

  • Compared to Total Retail -> subscription boxes only account for 0.2% of all traffic
    But at 30%+ growth YoY, Sub Boxes are among the fastest growing verticals of retail (vs. 5% increase for Total Retail in 2017 YoY).

    How was the custom industry built?
    Through third party research, media, aggregator sites and downstream from search, Hitwise has developed a list o over 250 sub brands (covering beauty, clothing, pets, food, alcohol and hobbies).
    This list was then culled down to the top 170 sub box sites, based on site traffic meeting feasible thresholds.
  • - Peak in the industry occurs in Nov & Dec like the retail calendar.
    - 2017 saw a significant shift to November -> largely driven by Cyber Week / Black Friday becoming widespread in the UK.
  • 2017 shift to Nov largely due to Fashion & Beauty sub boxes -> where visits in that month were 21% higher than visits in Dec.

    Out of Hitwise’s 170 list of sub boxes -> - Fashion & Beauty accounted for 55% of online traffic, - Food & Alcohol accounted for 38% - Lifestyle (which includes crafts, pets, gaming) accounted for 7%.

    Fastest growth in 2017 also seen among Fashion & Beauty, growing by 34% YoY (vs.. 25-26% for Food & Lifestyle).
  • Note about Look Fantastic & Blurt It Out – visits to top domain
  • Q4 2017 saw ->
    Shift toward occasions & pampering – e.g. wedding, perfume, bath
    Growth in alcohol (e.g. gin), and health sub boxes (e.g. vitamin, supplement, fitness, gym)
    Shift to hobbies (e.g. crochet, scrapbook, gaming)

    => So what? Be on top of search term trends & ahead of the curve before the customer gains loyalty with a brand (i.e. repeatable business). Use keywords to target in PPC or content. These terms can also influence product mix.
  • 3.1 million people visited a subscription box site from Oct-Dec 2017 (i.e. 6% of online pop). This was an increase of 18% YoY.

    What do they look like first and how has the profile changed since the previous year?
    Might be expected -> female, younger, urban, both high and low incomes
    Highest growth though seen among more male, older -> particularly among the more “niche” sub box interests.
  • What do they care about?

    Plug for TGI partnership

    Sub boxes currently attract -> high retail spenders, fashion conscious, ethical, influenced and people who like to stand out
  • There are audience differences by the type of sub box

    Fashion & beauty: younger, female, lower income, enjoys experimenting
    Food & drink: Older, female & male, higher income, time poor and pays for quality
    Lifestyle: Range of ages & incomes, enjoys adventure, design and change
  • Highest overlap among people who visit lifestyle sub boxes, and also visit fashion & beauty sub boxes (15% overlap).
    When we look at YoY growth -> fastest growing opportunity is among people visiting fashion & beauty sub boxes, and also venturing into food & alcohol sub boxes.

    => So what?
    Cross-sell / up-sell opportunity among sub box subscribers.
    Inform your own product offering (what else is your customer interested in)
    Partnership & collaboration opportunities -> delve into more detail in the next chapter..
  • Collaboration – key to keeping existing customers delighted and strategic way of gaining new audiences.

    In this chapter – we look at one sub box provider that uses collaborations successfully to attract new audiences.
  • Background => Key collaboration each month

    November: Birchbox X Vogue => 100 Vogue Beauty Hall of Fame best picks
    December: Birchbox X Matthew Williamson => Brit luxury designer clothing & interior
    January: Birchbox X Ohh Deer => stationary & gift brand
  • Note -> Birchbox’s audience size each month is 100,000+

    Online population MoM % Change also shown to compare seasonal uplift.

    From Oct to Nov, Online Pop visiting vogue sites grew by 6%. Birchbox audience saw even greater uplift of 25%.
    From Nov to Dec, Online Pop searching/visiting MW’s site was tiny. Zooming into Birchbox’s audience, this grew by 59%.
    From Dec to Jan, Online Pop grew by 3%. Huge uplift in Birchbox audience also searching/visiting Ohh Deer of 267% (most successful box then from a collaboration point of view?)
  • Side note –

    Audience size for each brand varies - Vogue (500K-600K per month), MW (c. 5K per month) and Ohh Deer(c. 30K per month)

    So if we were to put actual volume, the difference between months for Vogue is 3,000, for MW is 100 and for Ohh Deer is 2,500
  • Pre Collaboration – only 1,000 people visited or searched for both sites – demographics for each brand also varied

    Birchbox – younger, lower income
    Ohh Deer – older, higher income, different geographies
  • Zooming into the combined audience – Birchbox AND Ohh Deer

    Audience size triples pre vs. during (noting that we are also comparing Pre-Collaboration, which is Dec - normally peak, to During-Collaboration, which is Jan typically low period).

    So what? This is an example of a successful collaboration – growth in both combined audience and shift in profile (if the strategy was to reach new audiences).
    The profile of this audience shifts as we combine the two:
    Older
    More male (but still female dominated)
    Slightly higher proportion in London
    Higher personal income

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