two boxes stacked on top of each other

Subscription Boxes Another Rising Example of Digital Disruption

3 minute read
Erika Morphy avatar
Are subscription boxes digital disruption or opportunity?

Remember when Amazon introduced subscriptions for consumer good items like toothpaste and paper towels? SAP Hybris co-founder, president and tech entrepreneur Carsten Thoma does, because the development helped nurture a theory he had about the direction of online commerce and retail in general.

Amazon launched the model almost two years ago and savvy — or time-crunched — consumers quickly learned to mix and match the items they wanted delivered in one monthly box.

The same held true with the arrival of subscription boxes a few years before that. Once a novelty, these curated offerings provided another level of personalization and have now become commonplace in retail sectors from sundries, to cosmetics, to clothes and even to pets.

What's Driving Interest in Subscription Boxes

Thoma's theory is this: we are moving to a world where the main way consumers will make purchases is through the convenience of a mix-and-match of commodity items — such as what Amazon offers — topped off by a curated and personalized experience.

Consider someone getting ready for a camping trip. That person normally might have to go to three or four stores to get all the gear and clothing and gadgets necessary for the trip. In Thoma's vision, this person orders a camping bundle from one retailer.

Carsten Thoma
Carsten Thoma
The driver behind this model is the younger generations whose concepts about shopping and owning things have changed dramatically. The glimmers of that vision are already here, he told CMSWire. 

"Take your smartphone for example. You can order a ride over the phone whenever you want … Or increasingly, cable company services," said Thoma. "Right now, what we are seeing is pretty much restricted to experiences that are suitable for those subscription models and it's also a little bit focused on commodities, but I do believe that as owning and buying behavior continues to change, this model will spread like wildfire. It will happen fast."

Learning Opportunities

Preventing Your Own Product/Service Disruption

For retailers, the question they need to ask themselves is twofold: How do I prepare for this and how can I keep my products from being utterly commoditized? The way to start is to understand the model and then develop the ability to, "punch out the context of your product catalog."

To explain he goes back to the consumer ordering a Lyft or Uber from her cellphone. "If you use a car-sharing service for two hours, then you have basically temporary insurance service, right? Those insurance companies have to be able to 'punch out' that insurance service in that specific context. Or take another example: If you are on Pinterest looking at garden furniture for the summer season — those furniture makers have to have the ability to punch out of Pinterest and offer you the chance to rent the furniture for the season."

And oh yes: all of this needs to happen within the experience before the consumer decides to leave it. The backend and hardware to do this is here, or close to here . Likewise predictive analytics, which when married to machine learning, is getting smarter all the time about predicting certain consumers' behavior patterns.

Although he remains optimistic, he does caution that the real problem will be the mindset of retailers who cling to the old world, said Thoma. "The knowledge exists and this industry is nothing if it is not adaptive. In the end, I think it will be a matter of just learning by doing."