As The Hut Group acquires Glossybox and rumours circulate of Walmart’s interest in Birchbox, personalised monthly subscriptions look to be a treasure chest of opportunities.
Traditional retailers have always had the same fundamental issue when it comes to managing supply and demand.
This has been made a lot easier with online behavioural understanding, targeted discounts and seasonal pricing, but it remains a climb uphill.
However, subscription businesses like the newly acquired Glossybox by The Hut Group and its major competitor Birchbox, rumoured to be targeted for acquisition by none other than Walmart, provide a myriad of opportunities for the retail industry.
A company the size of The Hut Group, or certainly one the size of Walmart, isn’t exactly going to be competitively begging for the new revenue opportunities these businesses offer.
‘While their volumes will indeed be impressive, I believe there’s much more at play here and it most likely comes down to the same old thing – data’
While their volumes will indeed be impressive, I believe there’s much more at play here and it most likely comes down to the same old thing – data.
With a vast database of people who have signed up to tweak and improve the personalisation of their subscription boxes month after month, they become incredibly powerful tools for insightful analysis on customer trends, the desires and demands of the consumer.
The price paid for Glossybox is as of yet undisclosed but it has raised more than $70m, barely touching the sides of a typical Rocket Internet investment plan with its aggressive approach of throwing cash at growth.
The likely return is summed up in the word ‘undisclosed’ – I assume this was more an acquisition on company fit and how The Hut Group’s overall vision for the future can align with that of the founders and management team.
So, what does this mean for the industry? Well, on the one hand you might see entrants such as L’Oreal – keen to understand more about its customer – enter the acquisition market; then again, how open it would be to selling other brands as a means of getting data will depend on its view of how the future looks for all digital consumer services.
Could fashion follow?
In fashion the likes of Stitch Fix, The Chapar, Trunk Club, and Thread, which offer competing subscription services, might see themselves as worth acquisition targets of other online retailers looking not only to modernise but gain some valuable insight into their audiences.
Whether there is likely to be consolidation right now, I don’t know, but it’s an exciting time to be a subscription business… then again, when was it not?
Predictable monthly revenue is something of which I think we can all be jealous, no matter the size of the pie.