Retail

Reinventions Of The Subscription Business Model

Subscriptions

Subscription services like Ipsy have long offered customers the chance to test samples when discovering new beauty products. These services are now building upon their existing business models by rolling out tester plans for full-sized products, but the real deal comes with advantages over just a sample.

Some customers might not consider samples to be valuable, after all. The items may not be as packaged as well as full-sized products, making them difficult to put in a purse and use while traveling, or consumers might find that those sample products are designed for one-time use.

Ipsy utilizes beauty profiles to help determine the items sent to a consumer and ensure its products meet his or her needs. The company takes personalization quite seriously, too, offering 10,000 different combinations of makeup through its Glam Bag monthly memberships. As a bonus, the new service — dubbed Glam Bag Plus — will ship out a larger bag on the first and every third delivery.

A service allowing consumers to receive full-sized products may particularly appeal to emerging cosmetic brands.

“Glam Bag Plus lets brands experiment with new products, where they have guaranteed demand, and helps them with their minimum order quantities from a production point of view,” Ipsy CEO and co-founder Marcelo Camberos told Glossy.

Such services have taken a more holistic approach to the beauty business, going beyond the actual bag. Ipsy recently launched a new eCommerce website enabling consumers to purchase products from more than 200 brands, a strategy that appears to have gained traction. The platform has seen 400 percent growth since its September launch.

The Subscription Pivot

Ipsy is hardly the only service finding opportunities in new variations of its existing model. In the early days of personal training app Aaptiv, customers could either take live a la carte classes taught by the Aaptiv trainers for a set price, or access archives of those classes via a subscription. The latter won out. In a June interview, Aaptiv founder and CEO Ethan Agarwal said his team quickly saw that an on-demand content subscription was much more popular, then doubled down on a fuller catalog of fitness training content. The live a la carte classes were no more.

Today, most Aaptiv members opt for a single annual fee to explore a variety of fitness options and the interplay between several workout types. The service may appeal to the runner who wants to train for a 5K, for example, helping him get guidance on running while also giving him advice on strength training, stretching and maybe some yoga. This all comes together to create a well-rounded, balanced program to improve his overall fitness experience.

This approach happens to align more closely with Aaptiv’s mission as a company: to make its fitness training easy and accessible throughout customers’ fitness journeys, on whatever paths they choose. The platform’s goals aren’t just to help consumers exercise more, but to get them on the path to exercising better. What started as an app for runners and offering three running training programs has now expanded to include 22 areas of fitness and more than 2,500 individual classes. In fact, Agarwal said Aaptiv releases 40 new classes each week.

“We are much more committed to helping our user on their fitness journey,” he said. “What people don’t like is the idea they have to pay more money every time they want to work out more, or in a more specialized way. That becomes a disincentive to working out, [and] giving people an unlimited offering removes that disincentive.”

Choices are key when it comes to subscriptions, according to the PYMNTS Subscription Commerce Conversion Index. It found approximately 75 percent of merchants implemented plan options in the second quarter of 2018. This shows that variety is more than just the spice of life, but also a key ingredient in subscriptions.

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