Subscription e-commerce gives Atlantic retailers a boost

Posted on April 13, 2021 | Ashley Fitzpatrick | 0 Comments

Newfoundland and Labrador-based natural skin care company Indigena welcomed the pick-me-up of a recent order, with the product to be included in an upcoming Loti Wellness subscription box. Owner Lisa Walsh was just off the production line, readying the shipment of at least 1,250 scrubs to go out next month, when she spoke to Atlantic Business Magazine.

Like so many other small-scale manufacturers in Atlantic Canada, the pandemic has been a challenge for Indigena. After an early pivot and bump from the sale of hand sanitizer, the company was slammed by the limited summer tourism season and COVID-19 restrictions. The normal wholesale business fell off as the orders from the Fogo Island Inn and other select accommodations didn’t materialize.

To survive, Walsh said she pivoted again and leaned into some early returns on special gift box collections and supply to the subscription box market, to draw attention for online sales. E-commerce isn’t new to the company and Indigena did contribute to more than one subscription box before the pandemic, including the Canadian Beauty Box. Beginning in May 2019, the company had ventured further into its own gift box offerings, with seasonal boxes.

Walsh said it all amounted to education through trial, error and feedback about the nuances of box-based e-commerce retail.

“You have to be very timely with it and you have to know who your market is, who you’re advertising to,” she said of direct gift boxes and subscription service supply.

“You have to look at your inventory. You have to look at your product ingredients, what you have on hand, what you can offer.”

Considering the details

A company retailing its own gift boxes online might include products from other local manufacturers and craft producers. An established subscription box brand will offer a wider reach and potential to add to your existing customer base, though likely less in returns. Having any bottom-line financial return at all will depend on the partner, terms and product.

Walsh said as a supplier, businesses need to think through product size, travel-friendly packaging and price point, naturally meeting the specs of their wholesale customer. If supplying a single product, you should offer something that will showcase your brand.

“It has to be timely and it has to be trending items that people want,” she said, using the example that in beauty there tends to be trends in essential oils, flavours, colours, scents, but there also might be interest specifically in a product reflecting the local environment.

Mindful of consumer trends, Indigena has developed products incorporating, for example, interest in watermelon oil as an ingredient in a night cream, while staying true to its own by pairing it with a Labrador tea extract.

You also should align with the target audience. A box might be branded to feature Atlantic Canadian products, or it might be centered on a broader concept like “beauty” or “kids.”

Also, think about how the product you’re considering will lever future business. Basically, if a box is intended for Gen Z, Walsh said as an example, there’s no point including a product that will cost $50 after the box sample runs out. The supply effort will be stressful and ultimately ineffective in landing new customers who will struggle to afford the product as offered.

An international box might demand too many units for small suppliers to handle, while a regional box might just be the fit and offer cash returns.

Subscription market growth

The subscription e-commerce market appeared to be growing even before the pandemic. A 2018 McKinsey study suggested it had grown by more than 100 per cent a year for the previous five years. Focused on the U.S., McKinsey estimated 15 per cent of online shoppers were signed up for one or more subscription services at the time, receiving products on a recurring basis. There were subscriptions with grocery companies like HelloFresh and Blue Apron, but also an increasing variety of offerings, from alcohols to shaving supplies to pet treats, to name a few examples.

The pandemic has only pushed more consumers online, with the potential to add to that growth.

Allyson England is owner of Nova Box and the East Coast Box Company. The boxes have shipped products from local makers – the Cape Breton Fudge Co. to New Scotland Candle Co., Sugar Moon Farm maple products to Halifax-based Duckish Skincare and more – across Canada and the U.S., but also internationally to destinations in Europe, Asia.

“I’ve definitely seen a surge in sales just from people wanting to support local and wanting to shop online. So I’ve certainly seen that trend in my own business,” England said.

At the same time, she added, there’s been a change in the landscape for companies like hers looking for suppliers, with new makers popping up, including “all kinds of new candle companies and chocolates and woodworking.”

England will first look to established partners when seeking products to include in a box, then go to the market for specific product types customers have enjoyed. She’ll also consider the practical concerns with each new product and supplier.

“If I’ve got a big (corporate) order for 500 boxes, I want to know what companies are capable of delivering on those kinds of orders,” she said.

“Really, I just want to support as many local companies as I can. So if you have a good product that people are kind of intrigued by, I’m definitely interested in partnering with those companies.”

The box business can give new companies and established small-scale manufacturers a jolt at just the right time, but Indigena’s Lisa Walsh said everyone is still looking forward to getting vaccinations out, restrictions lifted and the broader economy churning again.

“Online has quadrupled since COVID, but it’s still nowhere near our (regular) wholesale sales.”

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