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Americans want to automate their purchases, but they should be automating their savings
Published: Dec 8, 2016 5:26 a.m. ET
By Maria LaMagna
Lately, there seems to be a subscription box service for everything.
The concept has generated increasing buzz in recent years with fresh takes on a tried-and-tested format where people receive a box of goods for a certain value, but are mostly surprised by its exact contents.
Consumers increasingly like to automate their purchases, and there’s something for everyone. Last month, the publication MuslimGirl.com made headlines for starting a “care package” subscription specifically for Muslim women for $20 a month. It contains a Muslim Girl Crisis Safety Manual, head scarf and a can of pepper spray.
We can’t seem to get enough of these automated gifts. Americans made about 21.4 million visits to the websites of subscription box retailers’ websites in January 2016, up from only 722,000 visits in January 2015, according to the e-commerce and consumer analytics company Connexity’s Hitwise division, in a report for the research firm Euromonitor International.
By 2020, consumers will make about 30% of all their purchases through some type of subscription, up from only about 2% currently, said Marshal Cohen, the chief retail industry analyst at research firm NPD Group. (This calculation doesn’t include digital subscriptions such as Netflix NFLX, +0.66% and Spotify.)
The rise in subscription boxes is helped by established services like Birchbox, which delivers cosmetics to your home every month and debuted in 2010. It has more than 1 million subscribers, according to The Wall Street Journal, although it recently scaled back its operations, and ipsy, which also sends cosmetics to consumers for $10 a month, has more than 1.5 million, as of June. Dollar Shave Club, a company that sends razors and other male grooming products for less than $10 a month, had 3.2 million members when the consumer products conglomerate Unilever bought the company in July for $1 billion.
There’s one big problem with this robo-shopping trend: Although many services are inexpensive on their own, financial experts say Americans should be automating their savings — not their purchases, which can make spending money just a little too easy.
“Letting a computer automatically make the right choice for you is probably the best way to guarantee you won’t spend your rainy-day money on whatever your vice happens to be,” Claes Bell, a banking analyst at Bankrate.com, said about setting yourself up to save automatically. In fact, Americans’ top financial concerns are: not saving enough for retirement (58%) and not having an emergency fund (51%), according to a recent survey of more than 35,700 workers by El Segundo, Calif.-based financial education service Financial Finesse.
Indeed, a plethora of digital money-tracking services have emerged in recent years to persuade Americans to automate savings as survey after survey shows that most people don’t even have enough money put away to cover a $500 emergency.
And it’s not just subscription boxes: A recent MarketWatch analysis of Americans’ most popular subscription services showed that digital subscriptions alone exceeded the average cable bill, even though data shows there’s been an increase in the number of people who cut the cord.
Still, the variety of niche subscription boxes has evolved from the old wine club of the month as Americans treat themselves on a regular basis. Looking for salami of the month club? You’re in luck, if you have $150 (plus $10 surcharge). How about bait for fishing? That exists, too (for prices between $43.50 and $165). There are subscription services for pets at $20 a month, kids and people who want new clothes delivered to their door.
“It’s almost like getting a gift,” Cohen said. “Everyone loves getting a gift.”
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