Subscriptions: The New Membership Model for Retail

By Jayne Scuncio August 1, 2018

This story was written by Ann-Marie Alcantara and originally published by Adweek.com on August 1, 2018 with the title, “MeUndies Pivots Its Membership Model to Become More Exclusive for Customers.”

 

MeUndies wants to get even more intimate with its customers as the company evolves its subscription-based model to a membership one.

After seeing significant growth over the last 11 years, the direct-to-consumer underwear company believes that by incorporating membership into its business model, it can weather any financial storm while also providing deeper “relationships” with its consumers.

“This [program] is taking a customer that’s [already] engaged with our company and further investing in the program,” said Jonathan Shokrian, founder and executive chairman of MeUndies. “This is further investing in a core consumer that spends three times more on our website, and we’re anticipating a 47 percent increase in lifetime value for this core customer.”

According to Shokrian, MeUndies has sold 7 million pairs of underwear since debuting in 2011, and half of its customers who shop on the site are current subscribers.

“Our subscription revenue has nearly tripled, and we’ve been profitable with double-digit growth, year over year, over the last three years,” Shokrian said. He declined to provide exact growth and revenue numbers.

At a time when direct-to-consumer brands are swinging the pendulum of retail power away from stores and marketplaces and back to brands, experts see memberships as a key aspect of D2C’s continued growth.

Tien Tzuo, founder and CEO of subscription platform Zuora, thinks moving to a membership model is the right move—and one that more brands will make.

“[The membership model] is less about turning the brand into an exclusive brand but creating a tier [with] exclusivity, and then it becomes aspirational,” Tzuo said. “The future of ecommerce is not about selling products. It’s about having an ongoing relationship with customers.”

Tzuo believes that a membership can change this discussion as underwear becomes both a repeat purchase and a touchpoint for consumers to have a “day-to-day connection” with the brand. Tzuo points to companies like Stitch Fix, Dollar Shave Club and Netflix who have deepened a customer relationship, going beyond the products each of these companies are selling.

“We’re finding that theres no reason any company can’t do this,” Tzuo said. “All it requires is a shift in thinking.”

He added that companies “often underestimate” how easy it is to “tap into” brand strength and “turn it into a subscription membership.”

And of course, creating a membership model lets companies find out more about their customer. In this case, it means finding out if people like the discounts they’re getting as a member or if they like the exclusive items they’re buying, said Matt Kaden, managing director at MMG Advisors, a retail financial advisory firm.

“This could be a test and learn, or they can always go back to the subscription model,” Kaden said. “If they were going to be a customer regardless, but now [they have this] exclusive product, it will enhance what they get from a customer.”

Consumers can become members after signing up for either the adventure, bold or classic type of underwear or socks. The membership includes the discounted pair of underwear every month, as well as a reduced price on other items from MeUndies (like shirts and bralettes) and access to exclusive prints, like a Keith Haring style coming out on August 7. (For now, the discounts will vary on the additional items sold and won’t be set like the 13 percent discount on women’s underwear or the 20 percent on men’s.) Members will also receive invites to MeUndies.

While the membership model is one move that could make MeUndies more lucrative for consumers, Courtney Simons, senior director of brand marketing at MeUndies, said the change from subscription to membership is part of creating “more meaningful” relationships with their customers in a world where direct-to-consumer brands are everywhere.

“Brand loyalists are still incredibly powerful, and it’s the best form of advertising you can get,” Simons said. “Membership is an opportunity to reward them for their loyalty, and really as a consumer facing brand, we started [our thinking] as a consumer to build out this model.”

As part of the subscription-to-membership change, MeUndies is releasing a new campaign on billboards in Los Angeles and will push it out on email and social media as well. The campaign incorporates user-generated content from Instagram and showcases customers who feel comfortable—in both their MeUndies and their own skin.

“The notion of being part of a community, even if you’re removed by distance, is something we’re keeping in mind as we build out this experience,” Simons said.