Soup-To-Nuts Podcast: What will it take to save sliding sales of D2C subscriptions?

New research​ from the consumer research platform Attest found 41% of Americans have an active product subscription now, compared to 47% in 2020. In addition, the number of consumers actively looking for new product subscriptions fell four percentage points from 18% in 2020 to 14% today. The percentage of consumers with multiple product subscriptions also dropped from 21% last year to 18% in 2021.

But a return to in-store shopping, restaurants and in-person gatherings doesn’t have to be a death knell for D2C subscriptions. Rather, Attest’s research shows there is still significant consumer interest in the service with 65% of Americans remaining open-minded to the platform and only 21% saying they are unlike to consider it.

In this episode of FoodNavigator-USA’s Soup-To-Nuts podcast​, Attest CEO Jeremy King shares how D2C services and brands leveraging this path to market can continue to engage consumers by sharing what shoppers like and dislike about subscriptions. Notably, much of what industry thinks attracts shoppers to this segment, actually is pushing them away. In addition, King reveals who is most attracted to subscription services, how much they are willing to pay, and where within food and beverage there is the most opportunity and where there is the least.

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Now is the best & worst time for subscription services​

To better understand how consumers experience subscription services and tease out lessons not just for D2C but across marketing platforms, Attest surveyed a representative sample of 2,000 working-age Americans in August and found, as King explained, now is simultaneously the best and worst time for subscription services.

“It is the best because we’ve seen such a growth in at-home delivery and subscription”​ services thanks to the pandemic pushing people to experiment with buying new things in new ways, King said, noting an uptick in subscription services last year for services like Hello Fresh, Amazon Prime, Netflix and everything in between.

“It is also the worst time for subscription businesses because many people think that the pandemic effects are starting to unwind with people getting back to city centers, people getting back to physical shopping,”​ and a consolidation of subscription services by segment, King said.

Value trumps unboxing​

So, what do consumers want and what separates the winners from the losers? Well, according to Attest’s survey results, what consumers want from subscriptions and what companies think​ they want are not the same. For example, many subscription services place a premium on the unboxing experience, but as King explains, most consumers care more about the value of what is inside rather than the packaging surrounding it.

“The unboxing experience that we get from companies like Birchbox is really cool, but in general, customers don’t really care about unboxing. They care about the really obvious things,”​ like value for their money, the ability to pause or cancel easily and what real users think, King said.

He added the tree most important fundamentals include practicality, customization and inspiration.

“The number one most attractive factor for subscription business is practicality – delivery me the right things that I need at the right time in a volume and channel and style and timing that suits me,”​ King said.

“The second most attractive feature in a prescription is something to do with inspiration and trying something new,”​ he said.

Finally, flexibility to pause or cancel a subscription, and an easy, transparent communication about and with the service provider are two other fundamentals that King says consumers look for when evaluating a subscription service.

He added that these factors trump other hot trends, such as a brand’s purpose or ethos and indulgence.

Room for growth​

King says he sees significant potential for subscription services to capture new consumers both in what they offer and around the price point – which doesn’t necessarily mean slashing prices, compromising value or a race to the bottom.

“We saw in the research that most subscription buyers are willing to pay between … $10 and $20, maybe $30 a month for that subscription. But there’s a whole wedge of possible demand that exists at higher price points,”​ King said.

He explained a premium or super premium service would appeal to just over a quarter of baby boomers, who said they are willing to pay $30-$50 or more for a subscription. And even a sliver of Gen Z consumers said they are willing to pay up to $60 for a subscription.

Beyond price and the fundamentals, Attest’s survey shows significant potential for subscription services that cater towards indulgences, while still ticking all the boxes for basics. For example, King called out alcohol, cigar boxes, medical and recreational marijuana where it is legal, high-end cocktail and mocktail mixers and snack boxes.

The worst- and best-case scenarios​

To understand how best to balance all of these variables in the real world, Attest looked beyond the survey results and tapped into additional, unpublished research to model the best and the worst subscription boxes and marketing strategies.

The worst subscription would be one that is difficult to use, is endorsed by influencers and celebrities but not real people, offers a discount only after a long-term commitment, has limited customer service, has a delivery fee or isn’t delivered to consumers’ doors, and is difficult to pause or cancel, King said.

Alternatively, the best subscription would be inspirational and provide access to new or hard to attain products, ships consistently and conveniently, can be delivered where and when consumers want, transparently shares real reviews – even the bad ones – and offers easy-to-unlock promotions and top-notch customer service.

Three steps to success​

While subscription service providers must balance a lot of moving parts, King says doing so is possible if companies fully understand and listen to their consumers, identify a niche and become the most successful business operating in that space and offer real value.

Those interested in taking a deeper dive into Attest’s research can download for free the full DTC Digest: Unmissable insights for direct-to-consumer brands​ at askattest.com​. There you can find additional reports and insights that are shaping the food & beverage industry and market landscape.