Retail

Book Subscriptions Turn The Next Digital Page

Books

Brick-and-mortar retailers are turning to subscriptions as a way to complement their in-store selections. For example, Walmart unveiled a new eBook offering in August dubbed Walmart eBooks by Rakuten Kobo, which includes an audiobook subscription where consumers receive one audiobook per month. To encourage customers to sign up for the Audible-style service, Walmart is offering a 30-day free trial.

Walmart is hardly alone in doubling down on book subscriptions: Amazon is also expanding its subscription offerings for books by opening up its formerly invite-only Prime Book Box plan to Prime members, and DoorDash is rolling out a subscription plan as well, according to the PYMNTS Subscription Commerce Tracker. Here’s a look at how retailers are taking on the subscription market with offerings ranging from clothing to cars:

The average U.S. household’s subscription renewal rate is 85 percent. Those with an Amazon Prime membership, in particular, are happy with the perks they’re getting as subscribers — like free two-day shipping and discounts. In fact, a study found that 95 percent of current Prime subscribers say they’ll either “definitely” or “probably” renew their Prime subscriptions, up from 94 percent during the same period last year. That’s good news for Amazon, as the study found that Prime subscribers spend an average of $1,300 per year, and that its subscriber base continues to grow their spending. The study, which includes data from 500 Amazon customers, estimates that Amazon Prime subscribers spend almost double the $700 per year the average non-member spends on the site.

The average monthly cost of unwanted subscriptions in the U.K. is £50. To help consumers unsubscribe, services like finance app Truebill have come to market. That service, in particular, announced it has raised $5 million in Series A funding and launched a variety of new capabilities. The company also named a new CEO, Haroon Mokhtarzada, who co-founded Truebill with his brothers, Yahya and Idris Mokhtarzada. Launched as a mobile app to get consumers refunds on unwanted subscriptions, Truebill now aims to simplify and automate a consumer’s entire financial life. In a press release, Mokhtarzada said, “When we started Truebill, we initially set out to help users combat inefficiency and unwanted charges.” But now the company is seeking to “give consumers peace of mind and effortless control over their financials.”

Eight in 10 — or 80 percent — of software vendors are expected to use subscription-based business models by 2020. According to Gartner, the software industry is seeing widespread adoption of the software-as-a-service (SaaS) business model. Laurie Wurster, research director at Gartner, noted in a web post that “SaaS has not killed the software market, but is growing rapidly and pressuring legacy providers to include SaaS options or risk losing market traction.” Furthermore, the firm forecasts that all new entrants — not just the 80 percent of historical vendors — will offer subscription-based models by 2020. Wurster added, “what began as a trickle a few years ago has become a stampede of vendors wanting to make a move to a subscription business model.”

The projected value of the U.K. subscription box market by 2020 is £1B. Fashion subscription box service Stitch Fix has officially announced its plan to expand its offerings into the United Kingdom (the U.S. site, however, notes that subscriptions aren’t required). While shoppers across the pond will have to wait until the end of fiscal year 2019 to take advantage of the site, customers can now sign up online to be on the company’s waitlist. Stitch Fix Founder and CEO Katrina Lake said, according to Chain Store Age, “We believe our ability to create a uniquely personalized shopping experience is something that will resonate with consumers and brands outside of the United States.” At the same time, the company continues to find new ways to grow. This past year, it launched Stitch Fix Kids, a way for parents to shop for their children without the required subscription or membership. And in March, it introduced an undergarments business, which the company hopes will help its overall growth. At the time, Lake said the offering is a “new capability that allows us to serve more of our client’s wardrobe, while increasing incremental revenue.”

A quarter — or 25 percent — of subscribers have more subscriptions now than they did six months ago. And new subscriptions are coming to market: Audi, in particular, announced in September a pilot program dubbed Audi Select that allows customers to borrow from a small selection of vehicles. The service, which made its first appearance in five Dallas-Fort Worth area dealerships, gives customers access to a variety of vehicle types, from sedans and coupes to convertibles and crossovers. Subscribers aren’t limited to borrowing one particular car and can swap out their vehicles as often as twice a month using “concierge pick-up and delivery.” There is a time limit for subscribers, however: A customer can have a vehicle for up to six months. The program is a relatively all-inclusive experience, as the monthly fee covers maintenance, taxes and insurance — although drivers are on their own when it comes time to fill up at the tank.

AMC’s Stubs A-List program grew to 260,000 subscribers in its first seven weeks. Though adamant that they would not sign on with MoviePass, AMC has rather opportunistically realized that there is clearly a market for movies by subscription and has launched its own subscription service for a monthly fee. People are flocking to the new option, despite a price that’s nearly double MoviePass. AMC reports that the service, an extension of the company’s loyalty program, has accounted for about 1 million admissions, or roughly 4 percent of attendance at U.S. theaters. AMC CEO Adam Aron said, “This is very good for AMC and very good for our movie studio partners as well. While one would think that the rate of sign-ups will inevitably have to slow down at some point; enrollments now are continuing at quite a brisk pace, getting AMC to scale much sooner than we initially anticipated.”

Walmart’s subscription service offers an incentive to those who sign up — a discount on an à la carte eBook or audiobook, as well as the free trial. Will the offering gain traction? That remains to be seen, but Walmart’s offering shows that even traditional brick-and-mortar retailers are interested in creating their own subscription offerings.

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