Delivered to your doorstep: Subscription-based product deliveries could become big business for the Arab world.
Subscription-based services are all about turning a simple purchase decision into a habit or a recurring behaviour, with a subsequent continuous cash flow, writes Ahmed Gabr.
One industry that the region needs to watch is the subscription product market. In the US, it is growing substantially, with the market growing by 890% since 2014 according to Forbes. In 2017, it was up by 10% compared to the prior year.
Subscription-based businesses, or subscription boxes as some people like to call them, are basically companies that deliver services or products to your doorstep on regular monthly, weekly, or even daily basis. This business model has recently grown to cover a wide range of product categories including beauty and cosmetics, food and drinks, kids and maternity, as well as a plethora of other goods.
There is a reason why companies and investors alike are excited about this explosive growth. Subscription commerce provides a constant source of revenue for companies. It
capitalises on the busy lifestyle of big cities, taking the hassle away from replenishing regular supplies. But there is, clearly, another reason why customers love subscription services; the element of surprise is what makes these subscription boxes appealing to most clients.
JUST LIKE HIRING A PERSONAL SHOPPER
Mama’s Box is a UAE-based monthly subscription service that delivers a box of useful products targeting pregnant women and new mothers. Each box has 4-6 items that have been selected based on each customer’s pregnancy stage or baby’s age, as well as their taste and interests. Prices start at AED 900 for a three-month subscription, and go up to AED 2,700 for a full year package.
Founder Chirin Khawatmi, who herself is a mother for two children only 12 months apart, believes her business answers to a personal need she originally had.
“The product variety and availability in the market has grown drastically, customers are faced with so many options and appreciate the opportunity to be able to try/discover products in a more cost and time effective manner,” she explains.
Subscription boxes, such as Mama’s Box, are usually run by passionate entrepreneurs who are interested in a certain product niche, and by regularly collecting data about the interests of their customers, they can help them tap into interesting products fitting their needs that they might seldom discover on their own.
“A service that can help save us time and money by sending us what we need at the right time is bound to become popular,” Khawatmi says.
ONE LESS THING TO WORRY ABOUT
Another UAE-based box service is Fruitful Day which delivers fresh fruits, sourced from areas where that fruit is currently in season, in weekly packages to clients. Boxes come in different sizes with options including 4.5 and 9 KG boxes, as well as options specifically designed for companies wishing to regularly stock their corporate offices with healthy snacks.
“Subscription boxes are becoming popular because people are increasingly busy and enthusiastic about convenience”, says Marie-Christine, the company’s co-founder and managing director. “As an example, one of our clients has seven children and two companies, and having fruit delivered is one less thing to worry about.”
Since its inception in 2015, Fruitful Day business has doubled year-on-year, and they still have plans to grow their business further. They do not see the subscription business slowing down anytime soon.
CHALLENGES TO REGIONAL EXPANSION
While subscription-based services have proven to be a thriving business in the region, it’s not without some challenges.
“The challenge we had was due to extremely high shipping costs, and the fact that when dealing with local designers, they can't supply enough quantities,” says Fouz Al-Sabah, co-founder of Khaleejesque, a Kuwait based lifestyle magazine with a focus on the Arab Gulf that used to run a subscription box service that delivers an array of locally made design items.
Khaleejesque initially launched their box service, called il.box, as a way to promote and directly market design products from the Middle East. The response was very positive from both subscribers and designers. A number of designers experienced a huge increase in sales. However, they just recently paused the service citing logistical and supply challenges.
With most of their subscription box customers from Saudi Arabia, Qatar and the UAE, the company had some problems scaling the service to their regional customers.“We're currently reassessing the concept as a whole and will hopefully find a sustainable solution”, says Al-Sabah, determined to continue.