Dubai
Delivering “surprises” every month — as a business model, it’s a nice one to work on. And it seems that there are more UAE and Saudi consumers willing to be pleasantly surprised. And willing to pay for the privilege of receiving such surprises in a parcel each month.
“In retail, if you only keep on offering what people expect, they will go to the other store or take out their mobile and get into another site,” said Matthieu Guinard, CEO of GlamBox, which sends out a package of customised high-end beauty and personalcare products to subscribers each month. “The switching costs for consumers are already very low.
“And retailers at the same time have been struggling to collect information about customer satisfaction and what they are expecting from their shopping experience.”
But can subscription-based shopping models be the alternative? More importantly, will subscribers keep paying out each month just to receive a package of goods?
“What’s being offered is a new way of consuming a product,” said Guinard. “Subscription models have not changed the way people choose their products. What has changed — or changing in the Gulf markets — is what people are expect to have. And it’s being offered to them in an alternate way.”
| Dh100 ordinary monthly cost of Glambox membership |
| Dh500 membership costs per month for more ‘valuable’ packages |
Each month, exactly between the 23rd to the 26th, GlamBox subscribers will receive their parcels. Unlike with online shopping portals, the subscribers do not get to choose what they want. GlamBox uses its collected consumer data to come up with the selection of brands they place in a parcel and then have it delivered. That’s where the surprise comes in ... and it seems to be working.
For any fledgling subscription-based business in beauty and grooming, there is a ready marker of where they want to be. It was in mid-2016 that the consumer goods giant Unilever acquired Dollar Shaving Club for a whopping $1 billion.
“Who would have expected Dollar Shaving Club to be listed as the most wanted company in the beauty industry,” said Guinard. “It was based completely on a subscription model.
“The subscription model is coming on strongly — 40 per cent of these businesses are connected to the beauty industry in one way or the other. Another 25 per cent is into food, such as Blue Apron, Yellow Chef, etc. And the others are into fashion.
“Our premise is that our surprises do not come as a one-off — it can happen through the year.”
Currently, GlamBox subscribers are signing and paying up for the pleasure of getting what’s in the mail. Over the last 12 months, 80 per cent of subscribers have kept on shelling out their monthly payments. In the subscription business, it’s all about retention, and 80 per cent is very much a sweet spot.
Membership comes to around Dh100 a month, and the more “valuable” packages they receive would in the Dh400-Dh500 range. They also get to access special offers, through GlamBox’s alliances with third-party vendors.
GlamBox’s also creates revenue streams through tie-ins with beauty brands and being the platform where a brand wants to test out its new offering to a highly clued on audience.
And it seems that investors like the whiff of opportunities that GlamBox can provide in the longer run. A recent Series B fundings round had a consortium of Saudi investors acquiring a majority stake in the business, which was launched in 2012. The details of the new funds and the stake bought have not been revealed.
“In the last three years we had been growing enough without additional funding … we did 5x in growing the business in the last two years,” the CEO added. But we had reached a point where we needed to accelerate the growth. That’s when the new investor consortium came in.”
Currently operating in the UAE and Saudi Arabia, GlamBox plans to add Kuwait shortly and then keep adding on new markets in the region, where and when possible. In May last, the portal added a men’s selection, and this is now close to touching the 20 per cent mark. Outside of beauty and personalcare, it plans to add an accessory range at some point.
