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How Subscription Boxes are Threatening Daily Deal Sites

Livingsocial and Groupon are being given a run for their money.

Back in 2011, Daily deal sites were in their heyday. People signed up in droves, people begged for these companies to start offering daily deals in their cities.

Even with the explosive growth, there were trouble signs from the very beginning. Small businesses were claiming that their Groupon promotions had run them out of business, or that their payments from Groupon were months overdue.

While Livingsocial has begun to offer you a promo code just to incentivize you to stay with them, Groupon has more or less moved on to become a generic coupon code website (a la Retailmenot.com), which gives them much steadier revenue (and profit).

Nowadays The Daily Deal Sites Are Way Past Their Prime:

daily deal sites vs subscription boxes
Past their Prime?

It’s not difficult to view subscription boxes in a similar light: a simple business model that relies on people’s enthusiasm for products. But subscription boxes differ in some very important respects.

Convenience: Dollar Shave Club, which may be the biggest subscription box business, offers customers something they can sign up for and forget about forever.
It gives the company a recurring source of revenue that they can rely upon, and it gives customers a monthly package (people love getting packages!). Since people are always going to be growing hair, it means these customers can be loyal for decades (potentially).

Control: Instead of going to Walmart and finding the best shampoo that they have in stock (for example, ‘shampoo’ could be anything), customers will instead research and find the shampoo that really speaks to them. It may be a natural organic shampoo made by an artisan in the mountains of Montana, or something like that. But to the customer, they have a product that no one else has (uniqueness), and to support local artisans means you can be philanthropic with your consumption as well.

Will Subscription Boxes Fade Away?

It may not be difficult to look at the subscription box craze and wonder if we have peaked. But we don’t think that they will start to fade the way daily deal sites have.

For one, daily deal sites are an insanely easy business model to copy. You can’t patent ‘daily deals’, and there are thousands of Groupon-imitators out there right now all over North America.

Subscription boxes are easy to imitate, but they is no big ‘Groupon’ in the subscription business. In fact, its a way to expand income and customer loyalty among nearly every existing business. Nearly any business could start up a subscription box of their products and mail them out every month, or every three months.

It’s essentially a new way for any business, anywhere, to sell more products. Isn’t that awesome?