Brands like Stitch Fix, Rent the Runway, Le Tote, and even Amazon, with Amazon Prime Wardrobe, have shown in recent years how subscription services can work in the fashion industry. Now, a new report by Royal Mail suggests that the business model is going from strength to strength, and forecasts that the UK subscription box market will grow to one billion pounds by 2022.
The UK Subscription Box Boom Report showed that, while the initial growth of the market was largely driven by start-up companies, larger companies, too, are now trying their hand at the service. This new business model “presents significant opportunities for international expansion,” according to the report, which revealed that almost 90 percent of subscription businesses make part of their sales overseas.
Particularly popular markets for international sales of these businesses include Ireland and France, where 46 percent of subscription businesses currently have an overseas presence, Germany (39 percent) and Spain (31 percent).
But it’s not all plain sailing. The proportion of customers who decide to cancel their subscription services, known also as ‘churn’, poses a challenge to the market, as well as the issue of overcoming the key barriers to the take-up of such services, the report says.
“Businesses across the UK understand the significant growth opportunities that subscription services can deliver. The market is growing at a phenomenal rate,” a spokesperson from Royal Mail said in a statement. “Future success will hinge on overcoming the key barriers to the take-up of subscription services whilst keeping subscribers engaged.”
Photo credit: Royal Mail website