The subscription box market is projected to grow at an exponentially fast pace — $42.3 billion — between 2021 and 2027.
IMARC Group, a leading market research company, recently released a report showcasing the projected growth of the global subscription box market after being valued at nearly $23 billion in 2021.
The prediction falls in line with the evolution of the subscription industry as a whole, which grew at a compound annual growth rate (CAGR) of nearly 65% year over year (YoY), and is expected to reach more than $900 billion by 2026, according to The Business Research Company.
Read on to learn more about the evolution of the subscription box market, areas of opportunities within the segment, and the key players in the subscription box industry.
The Subscription Box Market at a Glance
There are three different types of models within the subscription box market:
Currently, replenishment represents the majority of the subscription box market — 37% as of 2021, according to IMARC Group. That same year, nearly 30% of consumers subscribed to brands offering auto-replenishment for household products, according to Jabil — a 10% YoY increase.
There are now more than 50% of online shoppers subscribing to a box and their interests are focused on two categories in particular: Beauty/personal care and food/beverage. These two categories accounted for more than half of all U.S. subscriptions in 2021, according to Recharge.
In 2022, it is imperative for brands to adapt their products and subscription offering to evolving consumer behaviors. Data shared at SubSummit 2022 shows that while some consumers are still increasing their subscription usage, others are now starting to limit the number of brands they subscribe to. For every subscription they add, they cancel another, according to Rocket Money (formerly Truebill) CEO Haroon Mokhtarzada.
“DTC subscription brands are going to have to embrace this new shift. With consumers becoming more aware of the effects of inflation, it’s critical for brands to add value to their offerings without raising their prices,” says Paul Chambers, CEO and Co-Founder of SUBTA.
How to Thrive in the Subscription Box Market
As the holidays are quickly approaching, subscription box businesses can take advantage of gift subscriptions to increase their acquisition rates.
Nearly 70% of consumers who received a subscription as a gift ended up subscribing to it themselves, while less than 20% gifted a box to their close ones last year, per an Attest survey conducted by SUBTA.
Apply to the 2022 Holiday Subscription Gift Guide to showcase your brand to 100,000+ consumers! Applications close next Sunday (9/25) at 11:59pm EST!
Gift subscriptions can also be leveraged as an acquisition tactic through your checkout process.
“If the consumer is buying a gift, ask the question, ‘What is the giftee’s email?’” suggests Christopher George, Co-Founder and Chairman of SUBTA. “Getting that giftee’s email is very important because it allows you to market to them when the subscription is done.”
Gifts aren’t the only way to maximize your Q4 sales this year.
Purchases made on electronic devices are expected to represent nearly 50% of all e-commerce sales this year, according to Insider Intelligence. It’s critical for brands to optimize their websites to stay ahead of competitors.
Key Players in the Subscription Box Market
Monitoring key players in the subscription box market is an effective way to learn new acquisition, retention, and overall growth strategies.
Below are some of the businesses that drive the subscription box market forward.
The dog-centric subscription box launched 10 years ago and now has more than 2 million active subscribers, adding 259,000 in just Q1 FY2023.
The consumer-packaged-goods company specializing in self-care products and offering a $15/year membership raised $155 million in funding just last year.
With more than one million active subscribers, FabFitFun’s subscription box has positioned the brand “to evolve into this concept of a shopping membership,” Co-Founder Michael Broukhim told Forbes.
Meal kits became increasingly popular during the Covid-19 pandemic, with 54% of consumers cooking more at home. HelloFresh alone finished Q2 2022 with 8 million active subscribers and more than 32 million orders.
The Future of the Subscription Box Market
The subscription box market has come a long way since reaching more than $20 billion last year. Entrepreneurs need to ensure their subscription boxes are convenient, exclusive, and flexible in the future.
Approximately 65% of U.S. baby boomers and millennials are planning to gift subscription boxes this year, per an Attest survey conducted by SUBTA. However, retaining holiday shoppers may be challenging for the brands that are unwilling to adjust their pricing. In the same survey, consumers revealed that price was their main reason for canceling a subscription.
“2023 will be defined by two key themes: Adaptability and exclusivity,” says George. “The businesses that understand and anticipate the shifts in the marketplace and the new consumer habits will be able to separate themselves from the competition.”
- IMARC Group’s recent report projects the global subscription box market to reach $65 billion by 2027 after being valued at nearly $23 billion in 2021.
- The replenishment business model holds the majority market share of the subscription box market and represented 37% of the market in 2021.
- Nearly 70% of consumers who received a subscription as a gift ended up subscribing to it themselves.
Looking for more opportunities to grow your subscription box business? Get expert advice and more insights to elevate your brand by attending SubSummit, the world’s largest DTC subscription conference.