After a Coronavirus Boost, Subscription Startups are Focusing on Retention

Excerpts from the article by Anna Hensel on Modern Retail

Branch Basics, makers of a plant-and-mineral based line of cleaning products, normally signs up about 900 new customers a week. In March and April, that number sometimes jumped to 1,400 a week, as more people shoppers in the U.S. started buying household goods in bulk.  

At the same time, Branch Basics was struggling to keep products in stock. The company allows customers to purchase products both à la carte, or sign up for a subscription service where they can get cleaning concentrate delivered anywhere from once a month to once every four months. The company decided to list some of its one-time product bundles as out of stock, in order to ensure it would have enough product left for subscribers.  

“It is a real disaster if we are pinging people’s credit cards and we won’t have product to ship to them,” said CEO Tim Murphy. “I think we got more subscribers immediately because they though that there was a better chance that if they subscribed, that they would actually get the product.”

Branch Basics isn’t the only subscription startup that saw a bump in new subscribers over the past month or two. Nick Stafford, CEO of DTC dog food brand Ollie, said that May is on track to be the company’s best month ever in terms of revenue. Subscription lawn care service Sunday recorded revenue that was two and a half times the company’s pre-coronavirus projections for those months, according to founder and CEO Coulter Lewis.  

This uptick in new customers for subscription services correlates with stay-at-home orders being issued across the U.S. Shoppers appear to have been more willing to try a subscription service if it meant that they were more likely to get certain household goods at the exact time when they needed it, instead of hoping that it would still be in stock by the time they got to the store. Now, the question is whether or not these new subscribers will stick with these products and services even after they have the option of going back to the store. Retention rates depend on not just quality of the product, but also how well these startups are able to keep product in stock, as well as handle an uptick in customer service questions.

For more, read the full article on Modern Retail

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