This article from OceanX CEO & Founder Georg Richter was originally published on Entrepreneur as part of continuing series of guest post on subscriptions. Read the full article here an excerpt copied below.
The current retail landscape is marked by the continued erosion of physical retail. A CB Insights report shows that about 7,000 U.S. brick-and-mortar storefronts closed in 2017 due to their failures to create online presences as well as debt built up after post-financial crisis buyouts.
That, coupled with potentially higher interest rates and more expensive capital, means many physical locations are becoming burdens. Brands and retailers are being forced to look for alternate channels.
Ecommerce has been the go-to channel, but the subscription subchannel has also seen its share of adoption: Consumer insights firm Hitwise reported visit growth of more than 830 percent for subscription brands between April 2014 and April 2017. Plus, McKinsey & Co. reports that the industry has grown more than 100 percent each year in the past five years.
Besides the obvious benefit of additional and recurring revenue, subscription offerings allow retailers to glean important insights from recurring customer behavior. These insights are the foundation upon which long-lasting relationships with customers are built, so retailers such as Target with two subscription offerings are understandably excited about and investing in the subscription channel.
It’s difficult to compete with the speed, price and product assortment Amazon offers, but subscriptions are the “in” form of convenient retail. Through subscription retail channels, retailers can provide customers with curated, exclusive and connected experiences that build deep, long-lasting relationships.