You must be familiar with the ‘subscription’ business—the age-old practice of getting newspapers or magazines, grocery or dairy products delivered at your doorstep on a regular basis, be it daily, weekly or monthly, and paying a certain amount for the service and the convenience it offers. Now, consider the same practice for buying things online and what you get is a business model called ‘subscription e-commerce’.
Although subscription e-commerce is already quite popular in the global markets, several Indian start-ups are now experimenting with it in a bid to get consumers to buy more products online. In India, these ventures are offering an array of products, including educational toys, gourmet food and cosmetics, on a daily, weekly or monthly subscription basis.
“The ‘discovery commerce’ or ‘beauty subscription’ model was first popularised in the US and European markets. From the word ‘go’, the business model appealed to us for its simple promise of making ‘expensive or hard-to-find’ brands more accessible to prospective buyers. With newer global brands entering a fast-growing Indian beauty market, we just felt that we were in a rare ‘right-place-at-the-right-time’ situation that had to be taken to the next step,” says Kaushik Mukherjee, co-founder of Mumbai-based Fab Bag, a beauty and grooming discovery service, where one can sign up to receive a monthly bag of the best products from top global brands right at one’s doorstep. “For as low as R399 a month, our members can receive both full-size and travel-sized products worth more than thrice in value,” adds the IIM-Ahmedabad alumnus, who started the venture along with his batchmate Vineeta Singh in 2012.
“The difference between a normal model and a subscription model is that (with the latter) we start engaging with customers from their first purchase onwards,” says Arunprasad Durairaj, co-founder of Flintobox, a Chennai-based start-up that promotes educative models and kits for children conceptualised by educators, prototyped by designers and manufactured by top-of-the-line printers. The toys are then shipped in a box to customers every month.
“We talk to parents after every box to get their feedback on what works and what needs improvement, so that there is continuous enhancement of the standards. This helps us improve the quality of the offering and also enhances the product, making it relevant for children,” adds Durairaj, who holds an MBA from the Tuck School of Business at Dartmouth in the US and a bachelor of engineering from Madurai Kamaraj University.
Subscription models traditionally have two features that are unique to them: frequency—in terms of months or years—and the fact that the payment needs to be made upfront for the period.
The Man Company, a subscription e-commerce platform for men’s grooming and essentials, however, has gotten rid of both. “Our belief is that each individual has a certain pattern of consumption and the frequency of purchase should be decided by that. So for starters, one can define different frequencies of delivery for each product (and pay as you go),” explains Mohit Saxena, co-founder and CEO, The Man Company. Having gone live in early September last year, The Man Company is currently growing at 100% in terms of revenues month-on-month and already has a healthy repeat purchase of 20%.
“We are targeting a subscriber base of one lakh in three years,” adds Saxena, who joined the start-up in 2014. The Man Company was incubated by Hitesh Dhingra (former CEO and founder of online retailer LetsBuy and co-founder of dating and matchmaking app TrulyMadly) and Parvesh Bareja (managing director of Helios Packaging, a perfumes and cosmetics packaging company) in 2013.
“We do not believe in setting up a time frame. One needs these products on a monthly basis in any case, so why limit it for a period? Once you set up a subscription, it remains on forever,” offers Saxena.
E-commerce provides a customer unmatched convenience in terms of options available, price comparisons and doorstep delivery, among others. Subscription e-commerce, too, provides the same convenience, but also helps customers discover and learn more about their passion. “It’s a fantastic way to discover and learn more about things one is interested in or intrigued by. In terms of business, the model has benefits like greater predictability, lower retention costs, increased loyalty and even constant communication possibilities,” says Janice Shah, founder of Mumbai-based The Gourmet Box, a gourmet food discovery and delivery platform.
The offerings
The Man Company has five product lines—body wash, face wash, shampoo, hair gel and shaving gel—and has 12 variants in total. In the near future, however, the start-up plans to launch deodorants and eau de toilettes as well, followed by soaps, beard management and personal hygiene products.
Gourmet food is another category that may be niche, but one that is growing at a rapid pace in the subscription e-commerce space. The Gourmet Box started as a small e-commerce website catering to Mumbai a couple of years ago, but it is now servicing over 8,000 PIN codes nationally and has a solid base of over 5,000 registered buyers. The offerings have also grown from 60 products to over 700 handpicked items and gift options.
The Gourmet Box was founded by Shah and Himanshi Vora in March 2013. “When we returned from the UK to our favourite city with our individual master’s degrees in hand, we noticed that a food revolution had just begun in India. The influence of cooking and travel shows and the aspiration for a better lifestyle had given rise to a great demand for gourmet food, but the supply and reach were in their nascent stages. The idea was to create a one-stop gourmet shop that would promote local and international artisans, and superior-quality foods throughout the country,” says Shah.
Another venture, New Delhi-based Samira Khandelwal and Jennifer Duthie’s Bake Box is out to satisfy gastronomes’ sweet tooth cravings. “The beauty of Bake Box is that we solve two problems—for customers, we provide an easy method to try out new cakes and, for bakers, a route to a highly-engaged customer base. It’s win-win at its tastiest,” says Khandelwal, a St Stephen’s College, New Delhi, alumna.
Bake Box was launched in August 2012 to serve ‘cake-a-holics’ in Delhi-NCR. Starting with a database of 200 customers, it now has over 4,000 in Delhi-NCR. It sells 50 ‘Bake Box’es a month on an average. It allots certain days in a month when a selected ‘baker of the month’ assembles a ‘Bake Box’, which is an assortment of his/her bakery’s best confectioneries. These boxes are then dispatched to subscribers. “This baker is responsible for putting the boxes together, which are then dispatched to customers for a particular month,” adds Khandelwal.
Another interesting initiative that has come out of the subscription model is Mumbai-based ChotuChaiWala, where you can order tea and get it delivered to your doorstep from different local tea stalls across the city’s streets. To make your tea-sipping experience smoother and easier, they also offer subscriptions for one week, two weeks or one month.
ChotuChaiWala was started by Zepo, a technology platform that has helped over 2,000 brands and businesses in India set up their e-commerce businesses. “We provide our customers with everything they need for an e-commerce business—a self-customisable website, a payment gateway and shipping support, all together as a package,” says Varun KR, marketing manager, Zepo.
“The brands that are with Zepo sell a variety of products, ranging from precious stones worth lakhs of rupees to quirky homemade craftwork by artists,” he adds. As the Zepo team sat discussing one day, some of the members wondered if the platform could be used by an unorganised sector in India as well. Thus was born ChotuChaiWala in May 2014.
They decided to try it out in Bandra first, one of the most economically fast-paced regions of Mumbai. “We talked to a few chai-wallas there and asked them if they would like to open up their chai shops on the Internet. To our surprise, many of them were able to grasp the concept fairly quickly. Most of them were already frequent users of smartphones and services like WhatsApp and YouTube, so the term ‘online’ no longer confused them,” adds Varun KR.
The road ahead
Acceptance for subscription boxes is still in its nascent stage, feels Shah of The Gourmet Box. “In India, acceptance has been hindered by issues like price sensitivity, lack of trust for e-commerce and fear of the unknown, among others. Having said that, we are definitely seeing a slow rise in well-curated subscription e-commerce models,” she adds.
After all, subscription e-commerce is a means to get products that you require, but do not necessarily want to go out and shop for. “While its absence was not a pain, its presence is a delight. We believe that this will be the next big thing in the way e-commerce is conducted in many product categories,” says Saxena of The Man Company.
Abhijeet Kumar of RainCan, another subscription-based prepaid solution, which provides daily essentials—especially perishables—to customers in Pune, is also quite bullish about the subscription model. “This is the model that will be accepted by Indian customers the most, compared to any other B2C model for FMCG/CPG goods. Relationship- and engagement-based businesses have always been the way India likes to transact. We need to create an ecosystem where a customer feels comfortable buying, receiving and paying for products and services,” he adds.
As of now, RainCan provides morning essentials like milk, bread and eggs, besides fresh items like vegetables and fruits under a subscription model. “This ensures that things are available on time, there is no need to hoard and, most importantly, you eat everything fresh,” adds Kumar.
“The difference between a normal model and a subscription model is that (with the latter) we start engaging with customers from their first purchase onwards. We talk to parents after every box to get their feedback… This helps us improve the quality of the offering and also enhances the product”
Arunprasad Durairaj,Co-founder, Flintobox, which promotes educative models and kits for children
“From the word ‘go’, the business model appealed to us for its simple promise of making ‘expensive or hard-to-find’ brands more accessible to prospective buyers. With newer global brands entering a fast-growing Indian beauty market, we felt we were in a rare ‘right-place-at-the-right-time’ situation that had to be taken to the next step”
Kaushik Mukherjee,Co-founder, Fab Bag, a beauty and grooming discovery service
“Our belief is that each individual has a certain pattern of consumption and the frequency of purchase should be decided by that. So for starters, one can define different frequencies of delivery for each product (and pay as you go). We do not believe in setting up a time frame”
Mohit Saxena,Co-founder and CEO, The Man Company, a men’s grooming and essentials platform
In India, acceptance (of the subscription e-commerce model) has been hindered by issues like price sensitivity, lack of trust for e-commerce and fear of the unknown, among others. But we are definitely seeing a slow rise in well-curated subscription e-commerce models
Janice Shah, Founder, The Gourmet Box, a gourmet food discovery and delivery platform