Subscriptions, Personalization Could Be Retail’s Bright Spot This Holiday

For years, it was frowned upon to give gift certificates or cash to someone as a gift, something that was seen as lazy or thoughtless in certain social circles.

But amid a global pandemic and the rise of digital shopping, something that was once reserved for college students or someone who lives far away has suddenly gone mainstream, according to Brett McLaughlin, chief technology officer at sticky.io – especially now that digital gifting allows for personalization.

“Something like a subscription, whether it’s a box or curation or the ability to select portions of a gift for oneself or services like MasterClass, all provide a degree of personalization,” McLaughlin told PYMNTS. “That goes back to the original thinking of wanting to show the recipient, ‘I know you in some way, I’ve thought about you,’ rather than just sending the $50 card that opens up at Starbucks.”

Gifting a subscription can also turn into a Christmas morning-like experience, he said, as the giftee creates their new account and figures out how to utilize the new service, including picking out what gets shipped in a curated box and learning about different features.

Sellers Love ‘em, Too

For retailers, subscriptions could be a way to work around the supply chain issues that are plaguing companies around the world — for example, McLaughlin said, a subscription may be gifted on Christmas, but the first physical item might not come in the mail until January, “so they’re able to use a non-rush, non-holiday method of shipping and order management as well as fulfillment, while still getting the value of a given-at-the-holidays type of gift.

“The retailers and platforms won’t just see more satisfied customers, but also larger sales,” he continued. “And it enables them to capture long-term relationships in a way that goes well beyond the customer buying whatever the craziest toy is for twice the price on eBay and then making a run for the hills.”

PYMNTS research, conducted in collaboration with sticky.io, estimated that 61 million U.S. consumers have at least one retail subscription, with as many as 225 million active retail subscriptions in place. The share of consumers with retail subscriptions has grown almost threefold since the beginning of 2020, reaching 24% in the third quarter.

Read more: 61M US Consumers Have at Least One Retail Subscription 

Going into the holidays, McLaughlin said subscription retailers need to be ready for “massive” digital traffic, noting that “this is a time where overprovisioning is a must.” One dropped connection could mean the end of a potential customer relationship, he said. That can be devastating for subscriptions, because it’s more than just a single sale — it’s months or years of purchases.

“This is not the time to be looking to cut corners,” McLaughlin said. “I would rather say we didn’t use 20% of our capacity and spent an extra $100,000, because it’s going to be very easy to make that up — and then some — by being available for everybody who came.”

Getting Personal

McLaughlin predicted that this holiday season will see the broadest digital shopping market yet, as it has become clear that last year was not just an aberration — eCommerce is here to stay.

“There’s a broader segment of the audience that is listening,” he said. “And I think that allows for greater creativity, because you’re no longer just trying to compete with everybody else for the quote-unquote millennial market, which is narrow to begin with.”

Unfortunately, from McLaughlin’s perspective, the shopping experience — particularly around Black Friday and Cyber Monday — hasn’t changed all that much. Deals are rolled out on a particular day or at a certain time, with people sitting online or going in-store to get the best discounts.

What’s likely coming, though, is a greater degree of personalization, as retailers try to reach customers based on segmentation and purchase history. McLaughlin said that a sleep supplement company, for example, could tie a promotion to holiday exhaustion, or a bedding company might advertise travel blankets for people visiting relatives whose houses are too cold.

“Those types of things feel so much more personal,” McLaughlin said. “And then they feed back into the gift idea, because now you’re connecting the subscription or item with the experience of the holidays … and all those things add up to memorable experiences.”

Finding a Social Media Balance

Brands also need to be cognizant of consumers’ increased utilization of social media for shopping, McLaughlin told PYMNTS, which compresses the already harried holiday shopping cycle. “You’re not going to the website directly and then looking for a product,” he said. “You’re seeing something, you’re clicking and you’re purchasing.”

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Retailers have to be careful, though, not to oversaturate their social feeds with every single item, and instead should focus on carefully curated, targeted items that have higher chances of success on social media, McLaughlin said. He also noted that there’s a fine line between successfully selling on social media and making posts that seem like glossy ads.

“People are okay with buying on social media, but they don’t want to feel like they’re being sold to,” he said. “They want to feel like they’re being shown something of interest, and if they want to buy it, they can. And if it gets too slick, you start to run people off.”