Global Subscription E-commerce Market (by Application Type, End User, Mode of Payment, & Region): Insights and Forecast (2023-2028)

Market Insight

Subscription e-commerce is a method of buying goods and services online that allows customers to sign up for subscriptions to receive the goods or services on a recurring basis. Customers who choose subscriptions receive their products in the form of monthly or weekly subscription boxes. Customers can subscribe to certain products from the seller that they require on a cyclical basis.

Subscription growth among millennials, rapid urbanization, rising popularity of online streaming services, increasing internet penetration, and growing use of mobile devices are expected to drive overall market growth during the forecasted period. The global subscription e-commerce market is likely to reach US$165.64 billion in 2023, progressing at a CAGR of 70.97% over the projected period.

Segment Covered

By Application Type: In terms of application type, the report offers insights of the global subscription e-commerce market into four segments: beauty and personal care, food and beverages, entertainment and others. Entertainment subscription e-commerce market is the fastest growing segment of global subscription e-commerce market owing to rising penetration of internet, wide variety of exclusive content available in different languages, increased convenience of accessing these services from any device and cost effectiveness in terms of lower price charged as compared to TV cables.

By End User: On the basis of end user, the report provides the bifurcation of the market into three segments: women, men and kids. Women subscription e-commerce market is both the largest and fastest growing segment of global subscription e-commerce market owing to rising number of working women, increasing presence of startups which are offering numerous feminine products and cosmetics, increasing penetration of social media trends and expanding e-commerce sector.

By Mode of Payment: The report further provides the bifurcation of the market into two segments according to the mode of payment: online payment and cash on delivery. Online payment subscription e-commerce market is both the largest and fastest growing segment of global subscription e-commerce market owing to digitalization, increasing trend of online shopping, many digital subscription services complying to online payments, increasing government initiatives to promote cashless economy and rising scope of payment wallets among younger generation.

Geographic Coverage

According to this report, the global subscription e-commerce market can be divided into four regions namely North America, Europe, Asia Pacific and rest of the world. The countries covered in North America region are the US, Canada, and Mexico, while Europe includes UK, Germany, France, Spain and Rest of Europe. Moreover, China, Japan, India, South Korea and Rest of Asia Pacific are included in the Asia Pacific region.

North America subscription e-commerce market holds the largest share in global subscription e-commerce market owing to expanding e-commerce industry, growing influence of social media platforms & celebrity endorsements on consumer lifestyles, rapid digitalization of businesses and rising adoption of cloud solutions contributing significantly to the expansion of digital commerce in the region. Whereas, Asia Pacific subscription e-commerce market is the fastest growing region of global subscription e-commerce market owing to large consumer base, rapid urbanization, increasing penetration of internet, massive sales volumes and thriving social and mobile commerce ecosystem along with continuous launch of innovative subscription boxes by leading brands. China holds the largest share of Asia Pacific subscription e-commerce market.

Top Impacting Factors

Growth Drivers

• Growing Use of Subscriptions among Millennials
• Rising Popularity of Online Streaming Services
• Increasing Internet Penetration
• Growing Usage of Mobile Devices

Challenges

• E-commerce Fraud
• Low Adoption of Subscription Boxes in Developing Countries

Trends

• Rising Use of Social Media in Marketing
• Increasing Integration of Artificial Intelligence (AI)
• Increasing Adoption of Subscription among Men
• Curation-based and Membership Subscription Models

Driver, Challenge and Trend Focus

Driver: Growing Use of Subscriptions among Millennials

Millennials are driving the growth of the subscription e-commerce industry. Due to busy lifestyle and lack of time for purchasing goods from physical stores or ordering the same products online every week or every month, millennials prefer to subscribe to a product or service that they need on a regular basis. Millennials are generally more loyal to the specific brands of products that they prefer to use and are thus more likely to subscribe to a product or service for a long term. Also, the rapidly growing purchasing power of the millennials is anticipated to support the growth of the market. The income of millennials is expected to be higher than those of other generations group, that is, the baby boomers, generation X and the post millennials. As the income of the millennial population would grow, the number of subscriptions made by them for various products as well as online streaming media would also grow rapidly, thus providing a boost to the growth of global subscription e-commerce market.

Challenge: E-commerce Fraud

All the subscriptions made by the consumers require them to pay for those services online using their debit or credit cards. Online payment for subscriptions carries a risk for the consumers as well as the players in the subscription e-commerce market. While signing up for subscriptions, many people make payments using their debit or credit cards and are required to provide certain details regarding the same. Such details can be stolen and misused by third party users. Hackers can gain access to the data which they can use themselves or sell it to cyber thieves who use it for making fraudulent transactions. Fraudsters might also make use of fake debit or credit cards to pay the company. In such a case, the service provider would be left without any payment for the transaction. Thus, the rising incidence of e-commerce fraud can act as a major obstacle in the growth of the subscription e-commerce market.

Trend: Increasing Integration of Artificial Intelligence (AI)

Artificial intelligence (AI) helps in bringing the personalization aspect in e-commerce platforms such as providing predictive recommendations based upon the customers’ search and purchase history. Recommendation engines are the most widely used applications of AI in the online media streaming industry. AI is extremely helpful for platforms which run on a subscription-based model as it helps in making recommendations and providing products and services to the users based on their preferences. As a result, many companies are refining their subscription models with the help of AI to offer products that appeal directly to the consumers’ interests. Thus, the growth of artificial intelligence would enable the players in the market to know their customers’ interests and preferences and thus provide a more personalized experience to their customers, boosting the growth of global subscription e-commerce market in the upcoming years.

The COVID-19 Analysis

COVID-19 brought in many changes in the world in terms of reduced productivity, loss of life, business closures, closing down of factories and organizations, and shift to an online mode of work. Lockdown policies, imposed by the government to prevent the spread of virus led to the closure of local retail shops, malls and supermarkets, incentivizing consumers to shift towards online shopping and use of e-commerce websites for the purchase of essential items, increasing the demand for e-commerce services and boosting the growth of subscription e-commerce market. As a result of rising awareness about online shopping and a positive shift in people’s attitude towards the use of subscription services, which were able to offer predictability and convenience in terms of availability and home delivery of essential items, the subscription e-commerce market would grow substantially. Therefore, the global impact of COVID-19 on subscription e-commerce market turned out to be positive.

Analysis of Key Players

The market for subscription e-commerce has been moderately fragmented due to the presence of large number of e-commerce platforms that operate in e-commerce subscription market. The key players of subscription e-commerce market are Unilever PLC (Dollar Shave Club), Amazon.com, Inc., The Walt Disney Company, Femtec Health, Inc. (Birchbox, Inc.), Blue Apron Holdings, Inc., Beauty For All Industries (IPSY), HelloFresh SE, Netflix, Inc., Peloton Interactive, Inc., FabFitFun, Inc., Loot Crate, Inc., and Stitch Fix, Inc.