Low growth, high return: How men’s commerce site Svbscription has thrived by taking things slow

Low growth, high return: How men’s commerce site Svbscription has thrived by taking things slow

ON AUGUST 14, 2013

The tech community’s natural reaction to a company like Svbscription is one of skepticism. You want to charge guys $300 for a box of surprises? And send it on a quarterly basis? Who’s going to buy that? Plenty of people, as it turns out. A year in and Svbscription has sold out of almost every one of its parcels. The company has succeeded by taking the precise opposite approach of most ecommerce sites: make it exclusive, limited, expensive, and high quality. Sure, that technique doesn’t make for insane startup-style growth numbers. But it resonates with a core audience, following the approach of Brian Chesky of Airbnb: “It’s better to have a hundred people who love you than a million people who kinda like you.”The company’s thesis proved itself within two weeks of launch, when it did $50,000 in sales. Svbscription has now grown to just 400 subscribers, 50 of which are premium members (their quarterly box costs more than $500). That adds up to around half a million dollars in annual revenue. By adding 100 more parcels each quarter (there is a waiting list of customers), the company plans to get to $1 million in revenue in the next year.

As Svbscription expands, it’ll keep its exclusivity but capping the number of parcels sold in each region. Currently subscribers are concentrated in the US, UK and Australia. The company, whose partners hail from Australia, are currently plotting how they’ll enter the Asian market, focusing on Hong Kong and Singapore. ” There is a real gifting culture in asia and we think that will help us in that area,” CEO Marc Goldenfein says. At it’s maximum, Goldenfein believes Svbscription should max out at 5000 to 10,000 members in each region.

Most VCs would scoff at that kind of slow, controlled growth, which is partly why Svbscription has bootstrapped itself rather than raise outside venture capital. The company knows its exclusivity is a major part of its appeal.

Beyond that, the products featured in the parcels come from small manufacturers and designers. They’re not even set up to do 10,000 orders, says Goldenfein.

Which is why the company’s next step is to help those small operations expand through manufacturing and ecommerce. Next week the company will launch an ecommerce offering separate from the parcels, following the Birchbox model of using the subscription box as a method to discover brands, which in turn leads to sales. The commerce site is in response to members emailing and asking where they can purchase duplicates of the items they’ve received in the boxes (which range from underwear and beach blankets to candles, literary journals and decorative magnifying glasses). Many of the items are developed exclusively for Svbscription and can’t be purchased elsewhere.

Beyond that, Svbscription is beginning to work directly with manufacturers to develop its own products. “We never saw subscriptions as the be-all end-all,” Goldenfein says.” Keeping with the company’s them of exclusivity, the initial ecommerce site will feature just ten items.

Svbscription launched amid a flurry of “stuff in a box” competitors. At the time, I argued that the fad a smokescreen, not a revolutionary new business model. In the men’s category, companies like 12Society, Five Four and Birchbox Man tackled the same category, but at a lower price point. Now the first of those is gone, basically. Birchbox Man, which has taken the “discovery leads to commerce” approach, appears to be thriving. Five Four is generating $350,000 a month in revenue from its subscriptions.

Svbscription managed avoid becoming sub-comm roadkill by relying on its taste, exclusivity and careful, measured growth. Now, with its expansion into commerce and manufacturing, it’s applying that approach to an even more sustainable business model, good old-fashioned commerce.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: