Pros and Cons of the Curation Business Model: Subscription Boxes

A curation business model - aka subscription boxes - has both risks and benefits, and can be a successful addition to your retail business or stand alone business, depending how you approach it. The key with the curation model is investing in personalization. This is the starting point - from here we’ll weigh the pros and cons.

Customers expect personalized subscriptions to become even more tailored over time. 28% of curation subscribers said a personalized experience was the most important reason to continue to subscribe.

pros

• If you have in-house data experts to scale your personalization efforts, you’ll have greater success with subscription boxes.

• If you already have an apparel, beauty or food business, these are typically the businesses that have the curation model, so you could easily add-on to your current business or start a new business with this model.

• Subscription boxes can be very lucrative, Considered a “splurge” by most standards, customers will buy subscription boxes and discover new products in the process. Compounded monthly, this profit model can scale quickly.

cons

• This model can experience higher rates of customer churn. These products are typically niche non-essentials, so they thrive when the economy is doing well, but can suffer when luxuries need to be cut.

• Not only is acquiring customers more expensive in the subscription box space, these businesses also have higher operating costs, including packaging, branding, and regular shipping.

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