We asked founder and CEO of OceanX, Georg Richter, how businesses can benefit from direct-to-consumer retail subscriptions.
For retailers looking to utilize subscription services for their customers, what is the first step?
For larger retailers and brands, there are often corporate hurdles to overcome related to how subscriptions fit into a larger existing channel strategy. Retailers need to engage with people who are familiar with the direct to consumer channel and strategize around what to offer, product mix, at what price and how to market a new channel. Many larger brands have never sold direct, so this can be difficult and many retailers are focused on either in store or e-commerce single transactions instead of relationships. The first step for many is considering a new mindset around a relationship. Next are some of the tactical elements like securing of the inventory for the new channel, setting up a system to capture data and solve for packing the boxes and handling customer service.
What is the number one shortcoming you’ve seen from retailers looking to implement subscription services within their organization?
Lack of experience and dedication to the new channel. Selling through brick and mortar retailer is established and e-commerce which subscriptions are a sub-set of is often misunderstood and not always welcomed because it can go against the grain of existing channels and business. Commitment from the top is key. That can extend to testing budgets and subscription concepts. While it costs millions to set up a physical store, we hear that many retailers and brand want to tip toe and test the direct to consumer channel but only invest a very small amount of money. This can often create a disconnect.
With the rise is subscription box services, how can retailers break through the noise with a unique product offering?
We are entering 2.0 territory in subscription boxes, or what I call the “new membership economy.” Simple subscription models with the same things in each box for all customers are slowing down as they lose out to Amazon. The next phase is with innovative companies who target customers looking for interesting and inspirational content mixed with personalization and exclusivity. To break through, the retailer needs to focus on customization and personalization of products perhaps with the help of machine learning and over the top customer service that fosters real sense of community and being known. A great example of the new wave of subscriptions is Play! by Seophra, which boasts exclusive digital content and in store experiences. Another example is the new kids box launch from Target, which allows for in-store returns.
What would be your message to a retail business looking to provide the best experiences possible for their customers?
Take the time to listen carefully to what your customers want. Ask questions and then deliver above and beyond what was originally promised; that might include a surprise, something exclusive that customers cannot buy in the store or in other channels and inspire them with products and services beyond their initially expressed wishes. Add sophisticated customer service to the mix. Use intelligent and subscription focused platforms and technology to capture all and every data point to be able to dazzle your customers, retain customers and use the data to find new ones.