Thinking Inside The Box: Indian Retail’s Latest Experimentation With The Tricky ‘Fashion Subscription Boxes’

by Tanya Krishna

11-December-2019  |  15 mins read

 ‘Fashion Subscription Boxes’  

Retail therapy has been said to work for majority of consumers today and the industry is not shying away from using this for its benefit. Subscription boxes have come up as an extension of this as retail majors are slowly understanding the needs of their consumers who wouldn’t mind having one thing marked off their monthly to-do list. And who doesn’t like surprises packed in a nice little box every month on their doorstep? Fashion subscription boxes are on the rise and are successfully delivering the trendiest, curated boxes of fashion by simply offering style algorithms to virtual and in-house stylists. While India is still at a nascent stage in this category, US has literally become a subscription nation with 31 per cent of millennials currently subscribed to at least one of the subscription services and another 38 per cent planning to so in the next six months. Not only millennials, but also baby boomers who represent nearly 20% per cent of America’s population too are binging on the subscription model.

India definitely is abreast of the model and has been subscribing to services like newspapers or magazines for years. It is only now that it has expanded its avenue to grocery items, daily essentials, grooming products, etc., and is now gradually exploring the subscription model in clothing sector as well. Start-ups like Sugarbox, Krate, Buttalks, Stylenook, Stylecracker, and many more are excelling in this segment and are receiving encouraging response while still understanding the consumer behaviour in the space. For Suprathik Reddy, Co-Founder, Krate, “Most of the consumers today need opinions on what they should buy or wear and subscription box provides them with a stylist who helps them get a box of curated style that suits their personality, every month, with an element of surprise. Additionally, fast fashion quite often puts the consumers in a ziffy about what to buy, what to wear and how much to spend on a particular piece of clothing. The whole idea is that one can create a mix and match wardrobe for a particular season and then our stylists also provide style tips on how to style and pair those items for a new look every time. So, its like e-commerce with an added service of helping you style your look every day.”

Where does it stand?

As the fashion retail industry is continuously drifting towards a new technological and convenience-led era, newer segments like subscription boxes are up for an upgrade with every passing day. While it started in the US with the success of Birchbox (a New York-based monthly subscription service offering beauty products), Dollar Shave Club offering grooming products, Stitch Fix sending curated boxes of clothing, etc., the past few years witnessed the segment picking up in India as well with quite a few start-ups building online subscription model. Stylenook, which offers workwear in a monthly subscription box, keeps it convenient with an option where the consumers can return the products from the box and keep only those they like. Arti Gupta, Co-Founder, Stylenook, doesn’t bet big on the model as the segment is still in a developing phase. “Subscription in India is actually a difficult game to play. We have enough satisfied consumers who are on subscription model with us and they keep coming back, requesting for a box. We are trying to develop a habit because once they get used to the experience, they will not want to go through the exercise of choosing and buying clothes by themselves. It is definitely a very good and easy way of developing a loyal customer base. I feel, it is a medium of the future and India still has time to get on with this model,” she adds.

Fashion is the highest margin category in the e-commerce market and while businesses have tried different methods for customer retention as competition is mounting in every consumer retail sector, subscription model is what works better for the online retail sector as in the case of Amazon’s subscription service Amazon Prime. Today, Amazon claims that India is its fastest growing market for Prime subscription, which ultimately proves that the Indian consumer is warming up to this model. “Subscription as an industry is very nascent. The concept of subscription has changed for good and people now have control over how many boxes they want and when they want to stop getting them and also how they want to change their style online, etc. The segment is evolving and there is response from the consumers but it’s still in a nascent stage because the whole idea of subscription needs more awareness. A lot of factors are facilitating the growth of this sector. Most of the consumer base is in the age bracket of 18-35 years with a good spending capacity. Also, working people who feel the need to dress up according to the workplace and also people shifting from Tier-2 and Tier-3 towns to metro cities often opt for this service to get help from a professional to up their style game. Social media too is a big growth driver,” informs Suprathik.

Subscription e-commerce services offer the consumers a convenient, personalised and often lower-cost way to buy what they want and need. According to McKinsey, the subscription e-commerce market has grown by more than 100 percent a year in US over the past five years. The retailers in this segment generated more than US $ 2.6 billion in sales in 2016, up from a mere US $ 57.0 million in 2011. This shows that the consumers, after getting a taste of the convenience and joy of receiving monthly packages, are getting hooked. Such impressive growth has also attracted venture-capital investments in the segment in India as well and start-ups are launching these businesses in a wide range of categories including cosmetics, razors, child and baby items, meal kits, apparel, etc.

The categories of subscription boxes

Krate

A study by McKinsey & Company has broken down the companies in the subscription box segment into three categories: replenishment, curation and access. Replenishment is about convenience wherein a consumer opts for a subscription to lessen the task of buying a product he/ she knows would be eventually required every month and about a third of people subscribe for this reason. Who wouldn’t want an item they buy on a regular basis delivered to them at their doorsteps?

Access is about the need to have a product, the means to which is only through subscription. A number of things are only available to subscribers and consumers in this category are willing to pay a premium to access it. For example, Darveys, a members-only site gives to its subscribers (at Rs.2,000) access to its wide range of luxury brand goods at discounted prices, sourced from around 800 luxury boutiques and vendors across the globe.

And finally, curation which is all about getting surprised by a monthly box and the anticipation and the eventual act of unboxing that follows, keep the customers hooked to the subscription model.

What and how of subscription boxes industry

Stylenook

As retailers are still trying to understand this segment, it seems that there is very little that one cannot have delivered on a subscription basis in a curated box as the industry is continuously ballooning beyond clothing and beauty products to deliver everything directly to the consumers. The business model is simple – getting insights from the consumers on their personal style statement and then sending a box with clothes curated by the stylists, on a monthly basis. Brijesh Devareddy, Co-founder, Buttalks, which is India’s only subscription service for men’s underwear, asserts, “We offer either a sampler or an annual subscription pack with three categories: Plan A, B and C which are priced at Rs.999, Rs.,1,499 and Rs.4,999 respectively for the sampler and the customer gets a discount of 10 per cent for annual subscriptions. We are a curated subscription service. Based on the personal preference of each customer who basically are men in the age bracket of 21-38 years, a stylist picks from amongst the best products and sends them over to the customer. We have 9,927 active customers currently. We have tie-ups with a number of major brands and we source the products from them. These include the likes of Dashing, Park Avenue, Levi’s, Hanes, Jockey, Celio, UCB, Crusoe, Zoiro, FCUK, Jack & Jones, Flying Machine, UCB, XYXX, Tailor & Circus, Diesel, CK, Superdry, Emporio Armani, amongst others.” At Stylenook, its about operating from the side of demand rather than from the supply side. The firm takes a look at the client’s requirement and curates the pieces accordingly, from brands like The Label Life, Suta, Indusdiva and even the likes of Marks & Spencer, but the focus is always on discovering rather than designing or creating.

Suprathik Reddy

Stylenook offers styling service for working women and Krate provides curated boxes priced at Rs.1,499 a month, to men catering to their trendy, casual and formal needs. At Krate, one starts with a quiz of 6 simple questions about the styles, occasion, work, etc., and a curated box is made in line with these information. However, unlike most of the other subscription-based firms, all the products sold at Krate are manufactured in-house. “We are a data-driven company. We have a bucket and according to the data we get every month, we decide what to make. Krate follows WGSN for global trends and designing is done on a monthly basis. We do not source from other brands since different brands have different sizing and we do not want to confuse ourselves and our consumers with different sizing,” avers Suprathik.

Will it work in India?

While few opine that subscription boxes will be the future of fashion retail, there is a long way to go for this industry to catch the fancy of consumers who still need to be made more aware about this almost burgeoning segment. “Making people aware about clothing subscription will facilitate the way forward. The way Indians shop is very different — they visualise, plan for it, project it and then make the purchase. Plus, it is a very price-sensitive market, which necessitates for us to price the box such so that it was premium but still a lot of people could buy it. Also, cash on delivery option is what majority of consumers in India expect when they are shopping online and this too creates a hindrance for start-ups,” says Suprathik. These and many other issues are pulling back the industry even as the companies offering subscription boxes are hopeful of a great rise in the market value in the times to come. With easy revenue forecasting, less uncertainty, fixed consumers and minimal inventory maintenance cost, subscription market has a great potential in India even while the country has still a long journey to cover in terms of getting acquainted with this trend.

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