Question

The subscription box industry, including companies such as the Dollar Shave Club and Hello Fresh, among others, is proliferating the internet. Even companies like Sephora and Walmart have joined in this industry by offering cosmetic subscription boxes to their customers. According to McKinsey and Company, the subscription box industry has grown by over 100% since 20131. For this exercise, you will be applying your knowledge from lesson 2 and completing researching online to perform an external analysis of the subscription box industry.

Required

1) Analyze the external environment for the subscription box industry by performing a STEEP (Social, Technological, Economic, Ecological and Political/legal) analysis. You should use external research and have at least 3 points for each STEEP factor.

2) Discuss the five forces for the subscription box industry. For each force, indicate the strength of the force (1=weak, 2= moderately weak, 3=moderate, 4=moderately strong, 5=strong). Then describe why you ranked the force as you did. Use external research and the five forces questions in lesson note 2.5 to guide your analysis. You should have at least a paragraph of discussion for each of the five forces. (

Answer 1

Subscription box industry

STEEP

P: political factors

Legislation:current and future legislation(party) regarding product handling, packaging, labeling, and distribution will impact subscription box companies

Jurisdictional differences while working as global:a corporation must work around and accommodate the requirements of various jurisdictions, also keep operational consistencies.

The federal trade commission (ftc) has already stepped up the following enforcement actions

Companies must make specific disclosures at certain points throughout the purchase, confirmation and renewal process. Companies need to define key but they also need to repeat them. May be as FAQ

Company should disclose additional material other than pricing.

E: economic factors

Trade:Sourcing of various ingredients and materials depends on trade with foreign nations and companies

Economic prosperity & decline:The subscription e-commerce market has grown by more than 100 percent a year over the past five years.the largest retailers generated more than $2.6 billion in sales in 2016, where as in 2011 only $57.0 The number of subscription boxes industry wide risen 40%, to 3,500, in march 2018

S: social factors

Lifestyle:Subscribers tend to be younger urbanites, they are more likely to be 25 to 44 years old with incomes from $50,000 to $100,000. These subscriptions particularly appeal to women, who account for 60 percent of them.

Top 4   sites with highest number of current subscribers:

Women:dollar shave club,lipsy birchbox and sephora play

Men:dollar shave club,harrys,blue apron,bark box

T: technological factors

Technology development & innovation:The rise of subscription boxes has largely been driven by start-ups. Venture-capital investments, start-ups have started these businesses including beer and wine , cosmetics, feminine products, meal kits, pet food, razors, underwear, women’s and men’s apparel, video games, and vitamins etc...

Access to technology: artificial intelligence (ai):artificial intelligence (ai) learns customer’s preferences through different touch points, like what a customer keeps and return back

E: environmental factors

• They have been marketing eco friendly bags and gotoob travel bottle.bamboo drinking and reusable snack bag etc..
• Provide some advantage to these customers

2)

(1=weak, 2= moderately weak, 3=moderate, 4=moderately strong, 5=strong)

Threat of new entrants(point:4)

• Subscription box industry can take advantage of the economies of scale it has within the industry, fighting off new entrants through its cost advantage.but as booming industry scope for new entrants at loss

Bargaining power of suppliers(point=2)

• Subscription box a sustainable business model can purchase raw materials from its suppliers at a low cost.can have different suppliers among different geographic locations. This way it can ensure efficiency within its supply chain.

Bargaining power of buyer(point=5)

• Subscription industry focus on innovation and differentiation(niche market strategy) to attract more buyers

Threat of substitution(point =2)

• Subscription box firms focus on differentiating its products. Gives chance to buyers to choose products as unique so they do not shift easily to substitute products

Rivalry among existing firms(point =2)

• Subscription box industry focus on its own differentiation startegy through the actions of competitors will have less effect on its customers

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