[HUB Report] Subscription-Based Commerce - Brands at the time of Subcom

1. SUBSCRIPTION BASED-COMMERCE BRANDS AT THE TIME OF SUBSCRIPTION COMMERCE - Q2 2014 -
2. HUB Report Subscription-Based Commerce Foreward «The product that you sell comes second to the reason that you are selling it. This is how we could summarize the vision of professionals developing their « subscription- based commerce » (or SUBCOM) business model. After emmerging in the United States the past few years, the concept of SUBCOM has quickly gone international, notably in France where it’s been a wild success thanks in particular to « BOX ». Still viewed as a simple marketing tactic, this new form of commercialisation will actually gradually alter consumer trends by replacing the notion of the communty being the focus. For companies this represents the means to increase the popularity of their products speciifically amongst a target audience and turn it into a loyal customer base with a model based on recurrence. Which sectors are in the position to participate in this model? What are the keys to success? What are the examples to follow? This HUB Report answers all these questions by presenting this relatively new market, the way it works, various stakeholders in the ecosystem as well as its prospects for the future. » www.HUBinstitute.com 2 Emmanuel VIVIER Co-Founder Vincent DUCREY Co-Founder Vincent PUREN Head of Content
3. HUB Report Subscription-Based Commerce User Guide for the “FULL” Version www.HUBinstitute.com 3 FOR A BETTER EASE OF ACCESS OF THE SLIDES AND MORE INFORMATION, REVIEW OUR ANALYSIS AND LINKS IN THE “NOTES” SECTION CLICK ON THE “YOUTUBE” ICON WHEN YOU SEE IT TO OPEN AND BENEFIT FROM THE FEATURED VIDEO . THE “GLOSSARY ” AT THE END OF THE REPORT WILL HELP YOU UNDERSTAND KEY TERMS.
4. HUB Report Subscription-Based Commerce Summary of the complete version of this HUB Report www.HUBinstitute.com 4
5. www.HUBinstitute.com 5 Subscribe for full version HUB Report Subscription-Based Commerce
6. HUB Report Subscription-Based Commerce Order the full version report www.HUBinstitute.com 6 ORDER YOUR HUB REPORT www.hubinstitute.com/en /sections/hub-reports/ ESSENTIALS • A PowerPoint support enriched in the « notes » section • An analysis of the first experimentations in many sectors • Interviews of experts • Predictions on the upcoming turn • And even more…
7. www.HUBinstitute.com 7 ORDER YOUR HUB REPORT www.hubinstitute.com/en /sections/hub-reports/ SUJETS (EDITION 2014) Order the full version report HUB Report Subscription-Based Commerce Google Glass Subscription-Based Commerce Connected Display Bad & Good Buzz Futur du Retail 3D Printing
8. SUBSCRIPTION-BASED COMMERCE INTRODUCTION 98www.HUBinstitute.com
9. 51.1 BILLION € What e-commerce is worth is 2013 E-commerce in France A market undergoing strong growth: 51 billion + euros in 2013 19 FEVAD – Key figures 2013 / Médiamétrie – Observatoire des Usages Internet – March 2013 77.4% Of French population shop online = +17.5% more transactions +13.5% in revenue = 89.3% of age 25-34 92,2% of AB+ www.HUBinstitute.com
10. SUBSCRIPTION-BASED BUYING SYSTEM HYBRID PROCESS MIXING SALES AND MARKETING Subscription-Based Commerce : What is it ? A new business model for e-commerce professionals, but that’s not all… 210 THE IDEA : RE-ENCHANT THE ACT OF BUYING … EVOLUTION OF THE SELLER’S ROLE INTERMEDIARY + CURATOR + ADVISOR ... BUT WITH SOME CONSTRAINTS LOGISTICS, STOCKS, SHIPPING & HANDLING, SEASONALITY, ETC. 1 2 3 www.HUBinstitute.com
11. Subscription-Based Commerce : facilitating the repeat purchase A virtuous circle based on the test, learn, subscribe model 311 RETENTION BUSINESS MODEL TARGETING SUBSCRIPTION www.HUBinstitute.com COMMUNITY DISCOVERY TRYVERTISING
12. Subscription-Based Commerce : keys to success A process based on discovery and the desire to make simplify one’s life 312www.HUBinstitute.com DISCOVER NEW PRODUCTS BE A MEMBER OF A COMMUNITY BUY (FOR SELF OR OTHERS) AN ORIGINAL PRODUCT OR SERVICE ENJOY ONE’S SELF MAKE YOUR LIFE EASIER FIND PRODUCTS CHEAPER THAN THEY USUALLY COST INDIVIDUALLY
13. A New Shopping Experience: based on “Data” A simple and targeted mechanism, focused on discovery 313 ONLINE REGISTRATION 1 2 3 4 5 FILL OUT FORMS AND CHOOSE PRODUCTS(S) SUBSCRIPTION WITH OR WITHOUT COMMITMENT PERIODIC DELIVERY OF SELECTED PRODUCT(S) EASY PAYMENT AND DELIVERY TO SUBSCRIBER’S HOME THE PURCHASE PATH www.HUBinstitute.com
14. How does the customer benefit? A model based on simplicity and accessibility 314www.HUBinstitute.com CUSTOMER BENEFITS www.hubinstitute.com/sec tions/hub-reports/
15. Subscription-Based Commerce : How do brands benefit? An extremely targeted channel 715 PROMOTION KNOWLEDGE OF THE CONSUMER REPEAT PURCHASES www.HUBinstitute.com
16. Subscription-based Commerce : Essential For the entire HUB Report: Subscribe www.HUBinstitute.com 16 ORDER YOUR HUB REPORT www.hubinstitute.com/en /sections/hub-reports/
17. THE MARKET FROM FOOD TO FASHION: THE IMPACTED SECTORS www.HUBinstitute.com 17
18. HUB RADAR : Overview of some activity sectors that are involved 4 USA EXAMPLES EUROPE EXAMPLES FunctionalEmotional 18www.HUBinstitute.com FOOD AND DRINKS BEAUTY AND COSMETICS CHILDREN AND TOYS FASHION ACCESSORIES CHILDCARE « LIFESTYLE » ACCESSORIES
19. Subscription-Based Commerce Matrix 19www.HUBinstitute.com DISCOVER THE SUBCOM MATRIX www.hubinstitute.com/en /sections/hub-reports/
20. Expert Opinions www.HUBinstitute.com 20 Quentin Vacher Head of Europe - BIRCHBOX Interview with Subcription-Based Commerce experts Martin Ohannessian Fondateur – LE PETIT BALLON Sarina Lavagne d' Ortigue Directrice Mkg - MylittleParis Jérôme Traisnel CEO - SLIMPAY
21. www.HUBinstitute.com 21 Entretien avec les spécialistes du sujet Abonnez-vous pour profiter de leur vision DISCOVER INTERVIEWS www.hubinstitute.com/en /sections/hub-reports/
22. SERVICE SUBSCRIPTIONS 1ST STEP : DEMOCRATIZE THE USES 922www.HUBinstitute.com
23. Analysis of 5 sectors affected Entertainment / IT / Luxury / Transportation / Tourism 2623www.HUBinstitute.com MORE DETAILS PER SECTOR www.hubinstitute.com/en /sections/hub-reports/
24. PRODUCT SUBSCRIPTIONS 2ND STEP : SIMPLIFY THE CYCLE OF THE FUNCTIONAL OR EMOTIONAL PURCHASE 924www.HUBinstitute.com
25. What are the drivers of this business model ? Pragmatism vs. Hedonisme All the keys in the full version of the HUB Report 2925www.HUBinstitute.com BUSINESS MODEL KEYS TO SUCCESS www.hubinstitute.com/en /sections/hub-reports/
26. PRODUCT SUBSCRIPTIONS 1-FUNCTIONAL PURCHASES 926www.HUBinstitute.com
27. Analysis of 8 sectors affected Mass Consumption / Food / Tourism / Childcare / Hygene & Beauty / Health / Art / Funeral 2327www.HUBinstitute.com MORE DETAILS PER SECTOR www.hubinstitute.com/en /sections/hub-reports/
28. PRODUCT SUBSCRIPTIONS 2-EMOTIONAL PURCHASES 928www.HUBinstitute.com
29. 1029www.HUBinstitute.com Analysis of 8 sectors affected Fashion / Cosmetics / Food/ Wines & Spirits / Entertainment / Lifestyle / Leisure MORE DETAILS PER SECTOR www.hubinstitute.com/en /sections/hub-reports/
30. TOOLS TO HELP YOU DEVELOP Which mechanics ? Which platforms ? 930www.HUBinstitute.com
31. Value chain of the business model of “Subscription Commerce” A simplified and optimized process 331 BRANDING & BUSINESS MODEL 1 2 3 4 5 SUPPLY & MERCHANDISING LAYOUT & PRESENTATION ACQUISITION OF CONSUMER RETENTION OF CONSUMER www.HUBinstitute.com
32. SUBCOM Service Providers Platforms, presentation and analysis 2832www.HUBinstitute.com PLATEFORMS SELECTION www.hubinstitute.com/en /sections/hub-reports/
33. OUR PREDICTIONS 3rd GENERATION : SPREADING OF THE BUSINESS MODEL ! 9 • 33www.HUBinstitute.com
34. Consumption’s Future : Capitalize on service From the Purchase to the Subscription ? 934www.HUBinstitute.com IN-STORE PURCHASE ONLINE PURCHASE SUBSCRIPTION 1995 2015…
35. Which sectors will explode ? Focus on the future growth sectors 2935www.HUBinstitute.com OUR PREDICTIONS www.hubinstitute.com/en /sections/hub-reports/
36. THE QUESTION TO ASK YOURSELF… … So, are you ready? 936www.HUBinstitute.com
37. Dig deeper into Subscription-Based Commerce Contact us! www.HUBinstitute.com 37 SUBCOM SEMINAR (AT BUSINESSES AND SCHOOLS) WORKSHOP (SHARE THOUGHTS AND EXPERIMENT) CONSULTING (Audi, Brainstorming, insights…)
38. To go further: HUB Review by HUB Institute Our analysis and thoughts on innovation and marketing www.HUBinstitute.com 38 www.hubinstitute.com/review HUB REVIEW OUR MEDIA SPECIALIZED IN DIGITAL INNOVATION AND MARKETING
39. To go further: read our other HUB Reports One new in-depth study per month that explores a key trend www.HUBinstitute.com 39 HUB REPORTS OUR MONTHLY STUDIES OF DIGITAL TRENDS www.hubinstitute.com/reports
40. To go further: read our publications The “Influence Guide” and the “Risk-Free Communication Guide” www.HUBinstitute.com 40 HUB COLLECTION THE HUB INSTITUTE PUBLICATIONS http://www.hubinstitute.com/books
41. www.HUBinstitute.com 41 Subscribe for full version HUB Report Subscription-Based Commerce
42. www.HUBinstitute.com 42 ORDER YOUR HUB REPORT www.hubinstitute.com/en /sections/hub-reports/ SUJETS (EDITION 2014) Order the full version report HUB Report Subscription-Based Commerce Google Glass Subscription-Based Commerce Connected Display Bad & Good Buzz Futur du Retail 3D Printing
43. Contact us ! www.HUBinstitute.com 43 EMMANUEL VIVIER HUB Institute Co-Founder VINCENT PUREN HUB Institute Head of Content vincent.puren@hubinstitute.com @vincentpuren 51 rue François 1er, 75008 PARIS emmanuel.vivier@hubinstitute.com @emmanuelvivier 51 rue François 1er, 75008 PARIS
44. NEXT REPORT : CONNECTED DISPLAY www.HUBinstitute.com 44

Editor's Notes

I- INTRODUCTIONA| CONTEXTEB| TECHNICAL PRESENTATIONC| FUNCTIONALITIESD| KEY FIGURESII- THE MARKETA| OVERVIEW OF IMPACTED SECTORSB| PRESENTATION OF THE SUBCOM MATRIXC| INTERVIEWS OF EXPERTSIII- SUBSCRIPTION SERVICES
A|- ENTERTAINMENT|B| IT & SOFTWARE|C| LUXURY
|D| TRANSPORTATION
|E| TOURISM

IV- FUNCTIONAL PRODUCT SUBSCRIPTIONS
A| MASS CONSUMPTION
|B| FOOD INDUSTRY
|C| CHILDCARE
|D| HYGENE & BEAUTY
|E| TOURISM
|F| HEALTH
|G| ART
|H| FUNERAL

IV- EMOTIONAL PRODUCT SUBSCRIPTIONS
|A| PRE-FABRICATED
|B| COSMETICS
|C| ENTERTAINMENT
|D| WINE & SPIRITS
|E| LEISURE
|F| LUXURY
|G| PETS
|H| LIFESTYLE
|I| FOOD

V- TOOLS AND SOLUTIONS
A| VALUE CHAIN
B| SERVICE PROVIDERS
C| SWOT
D| PRICING STUDY

VI- PREDICTION : WHAT’S NEXT ?

VII- CONCLUSION
INTRODUCTION
E-commerce represents 51.1 billion euros in 2013 (vs. 45 billion in 2012) Source : FEVAD – Chiffres clés 2013
A sector that is attracting more and more stakeholders in France :
The number of transactions in France rises (+17.5% in 2013) to the 600 million mark.
Source : FEVAD – Key figures 2013
As far as the type of shopping :
E-commerce mostly impacts a younger demographic
 in France, 89.3% of people aged 25-34 are online shoppers
Source : Médiamétrie – Observatoire des Usages Internet – March 2013
And the buyers largely tend to have the products delivered directly to their homes
 82% of online shoppers choose in-home delivery
Source : baromètre Fevad Médiamétrie / netRatings – june 2013
This is a true innovation in services and retail :
A system of buying products through subscription
Principle : the customer pays for a subscription and receives one or more products every month that are more or less personalized
The e-commerce platform is an intermediary
Enabling the re-enchantment of the act of buying
Constraint :
 find enough products to offer to subscribers
 dependance on current events and stocks of brands

This trend started in the beauty and cosmetics sector and quickly declined
Two types of stakeholders in the market: specialized sites and diversified actors in the box
Around 120 boxes in the French market, all sectors included
The concept dates back to 2010 and was initiated by Birchbox
To have an idea of the volume in question : the platform Glossybox, for example, has around 220,000 subscribers worldwide.
Subscription commerce : a 6-step consumption cycle
Tryvertising, brands supply products and distributors promote them.
Targeted marketing for brands that is effective and highly qualitative.
Subscription to a box.
Discovery of products that, thanks to targeting, are original and tailor-made for our needs and tastes.
Retention of customers via an attractive marketing environment, great customer service
and an overall service that comes a bit closer to our needs with each delivery thanks to updates of targeting.
Creation of a community around brands.
Novelty :
The consumer doesn’t always have the time to go to a store and take a look at products that could be useful or tailor-made for him or her.
Depending on the details that he/she shared with the supplier of the “box”, the consumer receives a tailor-made selection of new offers that are likely to interest him/her.

Enjoyment :
Except for the boxes that are strictly functional (products that have a clearly recognized necessity), there is a clear element of enjoyment found in the other services, linked to the act of buying in itself and the end goal of receiving products just as when we go to stores.

Savings :
The box style of shopping allows for testing of new products at lower prices or in a smaller size, in order to find tailor-made products without wasting money while trying everything or ending up with a cupboard full of products that won’t be used.

Community :
The fact that boxes are often focused on a product or a range of products allows a community to be united more easily on the various platforms of the box’s supplier in order to compare opinions and discuss products.
This leads to helping subscribers in their shopping choices and also further refine the supplier’s familiarity with its customers.

Originality and surprise :
The mystery of the box’s content gives the subscriber the impression of receiving a gift every month. This fuels a certain suspense and creates anticipation.

The opening of the box’s packaging turns into an event. This event therefore becomes loaded with expectations and it is in this that there is the chance with each delivery for the customer to eventually be disappointed.
- Online Registration
People who are interested get invited to sign up online.
- Fill out a questionnaire
This is the most important step in the process, because it’s all about knowing exactly how customers are in order to send them a selection of personalized, pertinent and tailor-made products.
- Subscription with our without commitment
The subscription isn’t obligatory, the website visitor has the choice to subscribe or not, in which case (s)he can also benefit from prompt service whenever (s)he wants.
- Monthly delivery of a selection of products
The subscriber will receive a selection of products monthly, usually new products chosen based on his/her preferences.
- Easy payment and in-home delivery of the box
Payment of subscription price (spit playments possible) and delivery of the box to the home. Therefore, the convenience is that there’s no effort to make, such as leaving the house or other actions.
Curation :
The interest for the client is to receive products that correspondent to him/her, via a selection that was already made.
Practicality :
Time and energy is clearly saved because the steps of finding, selecting and shopping for products have already been made.
Sampling :
The products’ formats allow for a quantity sufficient enough to arrive at an opinion about them, rather than ending up with a product that won’ t be used and was expensive to pay for.
Flexibility :
In some cases, if the content of the box isn’t satisfactory, it is possible to return the package and not be billed for that month.
Moreover, subscription isn’t the only way that someone can benefit from the box service; it is possible to occasionally ask for deliveries.
REPEAT PURCHASES
Win the loyalty of new customers :
 There’s nobody more loyal than someone who pays for a subscription
KNOWLEDGE
Understand the needs of their customers :
 An incredible panel of testers for their new products
Collect information:
 Subscribers test the products and give their opinions (via questionnaires)
PROMOTION
Earn some visibility amongst customers
 thanks to the presence of products in the boxes
 highlight the partner brand on websites / social media / blogs
Les chiffres sont extraits de l’Etude Xerfi "E-commerce par abonnement : Analyse du concept de box et de la dynamique du marché" Juillet 2013
This is a non-exhaustive list of different industries and companies that utilize subscription commerce as a distribution channel
We notice that 3 sectors stand out and are largely represented
- Food / household purchase
- Cosmetics / Fashion
- Entertainment / lifestyle
The presence of these sectors serve as a reminder that women are the main target.
It also reminds us that this market is at the mercy of trends and feeds off of them.
Current events and new products from brands, in a sufficient quantity, are vital for this market in order to continue providing new discoveries and tailor-made products to subscribers.
L’infographie ci-dessus provient du blog de Sean Percival
(Vice Président du Marketing chez Topix) http://www.seanpercival.com/
« Subscription-commerce-subcom-matrix » publié en Août 2011.
L’infographie d’origine a été produite par Kissmetrics.

Légende :

Ronds gris  Rang par rapport au trafic (mesuré par Alexa.com Juillet 2011)
Ronds rouge  Capitalisation en Dollars (Juillet 2011)

On constate que toutes les tailles et tous les profils d’entreprises sont représentés sur le marché.
D’où de grandes disparités dans les moyens et des difficultés à se maintenir et se développer pour les plus petits,
face à des concurrents plus agressifs, dont le réseau et les ressources sont plus conséquents.
En revanche on constate que la progression sur le marché est assez rapide.
Si l’on prend l’exemple de Birchbox, l’entreprise capitalise 12 millions de dollars après à peine 3 ans d’existence.
Vous souhaitez solliciter Quentin Vacher ?
Merci de contacter Vincent Puren, Head of Content du HUB Institute, pour une mise en relation : vincent.puren@hubinstitute.com
Vous souhaitez solliciter Martin Ohannessian ?
Merci de contacter Vincent Puren, Head of Content du HUB Institute, pour une mise en relation : vincent.puren@hubinstitute.com
L’offre UGC Illimité n’est pas récente et fait partie de ce que l’on pourrait appeler les précurseur des abonnements.
Abonnement mensuel qui permet à l’utilisateur d’aller librement au cinéma, de profiter de tarifs réduits mais aussi de bénéficier de nombreux avantages (événement, privilèges)

Lien : http://www.ugc.fr/produitsEtServicesAbonnement.html
Toutes les box sont répertoriées sur le site touteslesbox.fr
Evian Chez Vous” propose un abonnement pour obtenir des livraisons régulières de produits de la marque chez soi. Le client peut choisir son jour, son créneau horaire et sa fréquence de livraison.

Lien : http://www.evianchezvous.com
Ce site propose pour 39,95$ par mois une paire de chaussure, un sac ou un bijou, parmi les recommandations faites par la styliste du site web.

Lien : http://www.shoedazzle.com/
Branding / Business Model

Curation
Utility / convenience
Sampling

Supply / Merchandising

Listen to influencers
Free product tests

Layout and Presentation

Users answer questionnaires for more customization

Acquisition of consumer

Use of celebrities

Retention of Customer
Critical e-mail campaign
A subscriber remains loyal in principle
Il existe à l’heure actuelle aux Etats-Unis environ une vingtaine de solutions de gestion des abonnements, comme le fait en France LicenceToBill :

Zuora : http://www.zuora.com/
Metanga : http://www.metanga.com/
Chargofy : http://chargify.com/
Aria : http://www.ariasystems.com/
Recurly : https://recurly.com/
SaaSy : https://saasy.com/
Spreedly : https://spreedly.com/

Mais ces plateformes ont un point négatif : « ces acteurs ne savent gérer que les paiements par carte bancaire et, par conséquent, s’exportent très difficilement en Europe » explique Sébastien Rousset, co-fondateur de LicenceToBill. Leurs pratiques ne correspondent donc pas forcement aux usages de paiement des européens.
Our entire consumption will not become fully automated in 2015 and it probably never will completely because some products aren't on our regular buying schedule.

However it is true that this is the model towards which the consumer society tends to move. With rapid urbanization and the accelerated pace of life in big urban areas, it's a safe bet that this purchasing model will not only normalize certain products, but also extend to other industries and thus reach new targets.
Aperçu des secteurs qui seront probablement les prochains à proposer ce business model, au moins pour developper la notoriété de leurs nouveaux produits

Divertissement : Boxes contenant des accessoires, des goodies ou des jeux via un abonnement.

Décoration : Recevoir des éléments de décoration chaque mois pour embellir votre appartement

Culture : Boxes contenant des billets de spéctacles et activités du moment. Offre culturelle a portée de budget et suggestions de nouveautés.

- Animaux : des abonnements pour louer des animaux de compagnie pour une durée limitée, dont tous les caractéristiques pourraient être personnalisés (espèce, age, durée, etc.)

Tech : Tester de nouveaux smartphone, objets connectés, avec un accès limité aux focntions
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