Examining the business model of replenishment subscriptions: a longitudinal case study

Abstract

Nuestro estudio desarrolla el modelo de negocio de las subscription boxes de reposición para encontrar las claves de su viabilidad. Para ello, utilizamos el Business Model Canvas (BMC) en un estudio de caso longitudinal de cuatro años sobre una destacada start-up del sector. Nuestro estudio muestra que el éxito de estos modelos radica en un servicio altamente personalizado a los suscriptores para reducir la tasa de abandono. Además, las empresas necesitan una mejor asignación de recursos de marketing debido al alto coste de las pruebas gratuitas y estandarizar los procesos de reposición desde las primeras etapas de desarrollo.

Subscription boxes continue to rise globally as consumers demand these services for a growing number of products such as cosmetics, fashion or pet food. Nonetheless, the increasing customer expectations, along with the complexity of internal operations, particularly for replenishment subscriptions, have made many of these businesses gone bankrupt in their early days. To tackle this problem, our study aims to developing the business model of replenishment subscription boxes to find the keys to viability that ensure sustained growth. To achieve this, we applied the Business Model Canvas (BMC) framework to a state-of-the-art subscription business. We used a longitudinal case study that lasted four years, which enabled us to build a complete view of the development of the business over time. Our study shows that the success of replenishment subscription boxes lies in the ability of companies to provide a highly personalized service to subscribers to reduce the churn rate, which is key in order to meet the needs of different customer segments within the subscription business. Moreover, replenishment subscription businesses need better allocation of resources to marketing strategies because of the high cost of free trials. They also need process standardization from the early development stages. These two factors will enable exponential, sustainable growth through market and product development.