Hello Mazel is a company that delivers delightful, simple, fun and delicious cultural products right to consumer's door, four times a year. The company requested public funding on Kickstarter which is a platform that builds a global community to help bring creative projects to life by funding them.
After three days, the project became the most funded cultural project in Kickstarter history. Hello Mazel's goal was to raise funding up to $18,000 and they reached mid-February the impressive amount of $133,127 (Kickstarter).
What is so innovative about this project is how those cultural goods are delivered to the consumer's doorstep in a box. This box concept is pretty straightforward. Customers sign up generally for monthly, weekly or quarterly box deliveries of diverse products hand-picked by the seller. Subscriptions are considered as the new way to get the best products that fit consumer's tastes to their doorstep every month without having to face the downsides of shopping.
As a consumer I realised that some products are arduous to find especially natural and locally produced products that we can find during our travels.
Actually 44% of travelers do some shopping when they travel around the world (Cook, 1995) and the main products purchased by tourists are local hand craft products. (Gahring et al.1995). Moroccan argan oil, as an example, has become the elixir du jour to treat dry skin used by all the cosmetic brands such as L'Oréal Paris. Therefore argan oil is now easy to find outside Morocco however it is either diluted, blended or unadulterated with other oils or fragrances (example with EverSleek Precious Oil Treatment which contains Cyclopentasiloxane, Dimethiconol, Parfum/Fragrance, Olea Europaea Oil/Olive Fruit Oil, Argania Spinosa Oil/Argania Spinosa Kernel Oil, Helianthus Annuus Seed Oil/Sunflower Seed Oil, Hexyl Cinnamal, Linalool, Coumarin, Carrot Oil/Beta-Carotene).
So what happens when a consumer wants the natural Moroccan argan oil or any natural/locally made product? Unless travelling to the country/local area where that specific product is made, there are no alternatives to live the cultural experience that a natural product can provide (Kim and Jang).
I figured it out that this need could be fulfilled by importing diverse natural locally made products and providing them to consumer's door through subscription box.
1. Service Description
The cultural box is a monthly subscription box filled with surprise natural locally made products to provide a sense of discovery to the consumers. Each month the box is subtly country themed, it could be for instance products made in India in January and goods made in Morocco in February. The country list will be oriented towards countries where the natural and hand-made savoir-faire is predominant. In order to minimize production costs, we will prioritise countries where labor costs are minimised. However in order to respect both client and supplier, we will label all our products fair trade by the way of respecting working conditions and minimum wages in regards to the local laws.
The aim of these country themed boxes is to provide to the consumers a unique cultural experience through natural locally made goods. Every month the box will contain five to seven different products from tea to soaps, natural masks or essential oils while respecting trading conditions. The box will also contain a personalised note explaining where the products is coming from, how they are produced, by whom and some pictures to illustrate in order to emphasise the cultural expression of these goods.
The cultural box will be available on an online platform where customers can get on an exclusive “waiting list” to subscribe without paying while the company gets the different products lined up.
Personalisation is key to the success of curated subscription services. Moreover, to provide the consumers with the best customised box, customers will have to fill out questionnaires in order to find out their colouring, preferred sizes and anything that could help us get to know our consumer's tastes. Along the same lines, follow-up surveys will be sent twice a year to get our customer's review about what they liked or did not like along with what they wish to see more.
Our business platform aiming to develop a community of subscribers and also be a place where these subscribers can share pictures of their latest box, products or leave comments. It is also a way for the company to be advertised by the word-of-mouth.
2. Market Analysis
The natural personal care products market has grown consistently in recent years owing to the rise of consumers concerned by their personal health and wellbeing. The global demand for natural personal care products, was over $7.6 billion in 2012,and is expected to reach $13.2 billion by the year of 2018 (Transparency Market Research). There are other factors that lead to the market growth such as extending distribution channels and new product development.
Skin care products lead the demand in the global natural personal care products market in 2011 with a 32.1% share while hair care and cosmetics come after. The market for organic skin care products is predicted to grow at a rate of 9.9% by 2018 (appendix 1).
As mentioned within the service description section, the company business model stands on fair trade. The sales of fair trade products represent £1.67 billion and there are 1210 fair trade certified producer organisations in 74 countries (fairtrade.org.uk).
According to a survey conducted in 2015 about fair trade products in Great Britain, 50% of the respondents agreed with the statement “I wish there were more Fair Trade products/brands available in stores.“ (Statista).
Over the last few years, the subscription commerce market has grown exponentially and is considered lately as a trend (Winter). In fact the subscription business is estimated to be a $3 billion market and more than $500 million has been invested in subscription boxes (Fung Business Intelligence Centre). The acknowledged success of some businesses applying the subscription commerce model has driven many entrepreneurs to launch their own subscription box services in inventive new niches across different countries around the world.
Regarding the type of consumers targeted by cultural box they are the young and older health conscious Millennials, in another word what we call the “Lohas“. Those deep greens consumers are described as people caring about their personal health, personal development and sustainable issues when they purchase a product. About their profile, they are usually educated, working women and have an income. Lohas defines an estimated $290 billion U.S. marketplace for products focused on personal health, fair trade, environmental and sustainable issues (Lohas).
The competitors in the subscription business represents an important market that sees inventive subscription box services in new niches coming to live every day. There are two types of competitors: the personal care boxes that aim to deliver products from more or less famous brands and personal care boxes that contain only organic products.
Indeed many subscription box services in organic products are launched, generally the boxes contain one type of organic product such as face creams, essential oils or only beauty cosmetics for instance and the products are industrially produced. As an example, Pure Natural box proposes six natural and organic products, including at least one full sized. The products provided are usually British brands; these goods are usually not hand-made (appendix 2).
On the other hand, Birchbox is focused on delivering personal care products made by well-known brands including O.P.I, Benefit, or Bioderma and regular collaborations with designers and notorious brands (appendix 3).
However none of those boxes are country themed and contain natural products that are locally hand-made produced with transparent information about where the product is made, by whom and how. In particular, none of those boxes support remote producers and enhance fair trade as a philosophy.
The price of monthly subscription boxes may vary according to the type of products delivered, from around £10 at beauty-centric Glossybox to upwards of £80 per box for high-end products such as anti-age serums (Forbes).
Most of the boxes contain a mix of sample-sized and full-sized sample goods. Sample-sized goods are ordinarily deluxe-sized. However some monthly boxes may provide full-sized products each month, this kind of boxes have a higher cost along with a higher retail value. Moreover, the number of items in each box fluctuates regarding the subscription box but most of the boxes provide four to seven goods per box.
Regarding World'sFinest box, it will contain five to seven products. The box will be priced at £16.66 for a twelve months contract. Subscriptions to the box will be available in 3, 6 and 12 month packages where prices will be inversely correlated to the length of the client commitment (digressive pricing policy). The targeted cost per box including the products cost, import cost, packaging cost and delivery cost will be £11.10 which leads to a margin of £5.56 (or 33%) (appendix 4).
The management of fulfilment of the subscription boxes will mainly depend on the number of subscription. At early stages the boxes can be fulfilled without any third party contribution. However while the number of subscription with gradually increase, we will switch to a logistic company based model which can assembly accurately the different products into the boxes though a warehouse.
Some companies such Maple Logistic Solution has a warehouse management system that uses a barcode with a scan and verify function that guarantees the right products are in the right box. These companies have staff and technologies to allow them to handle peaks with facility; therefore making sure shipping is done on-time with tracking in real-time through an online portal. Before picking any third party to distribute our products we will launch a tender across several providers in order to select the best offer.
Firstly one of the main challenges is to find relevant suppliers. Finding suppliers in different countries and make sure that it is possible to rely on them is the most difficult task. It is necessary to make sure supplies arrive on time so that the World'sFinest boxes are packed and sent out when due. A fifteen-days turn around will be the time needed to order directly the products to suppliers, receive them and then have time to accurately fulfil the boxes before the shipment of the boxes. A long term commitment with any supplier as well as a minimum order amount will help the relationship to be built on mutual interests. Once the supplier is found, an audit will be carried to check that fair trade conditions are respected.
Secondly we need to leverage the data available in order to measure client satisfaction. When launching new products this is very important to prevent any negative feedbacks from customers. Nowadays a company reputation can be rapidly damaged though social media and this is particularly true for new created businesses with little budget in communication. For that reason it will be important to use and monitor social media as a marketing tool to advertise the products and increase brand awareness and respond to client/prospects enquiries. The subscription commerce is growing quickly because consumers are keen to try new things but they can stop buying products when they consider the product or service in question is not needed anymore or that the marginal utility is too low. If this happening, the company has to find out how to reactivate expired customers or to search for new source of revenues and/or subscribers (Schlossberg).
Thirdly, this is imperative to guarantee the customer's excitement regarding the content of the box each month. That is why theming the boxes every month involve working with suppliers from all the part of the world which means new content and therefore a sense of wonder and surprise for the subscribers. We need to maintain our comparative advantage by always picking products hardly findable in proximity businesses or even on traditional online marketplaces. This will involve deep researches on local cultures. One way to mitigate that risk would be to leverage our community of client by inciting them to post on social media anything they have found interesting during their trip that they potentially like to have in the boxes in the future. We can imagine client posting a photo of product from a local street market in Bangkok (Thailand). This is the reason why we will create a hashtag named #WFideas and promote it via the multiple social media available.
Finally, safety regulation is another challenge. The safety of cosmetics is covered in the United Kingdom by the EC Cosmetics Directive (76/768/EEC). According to this regulation every cosmetic product placed on the market constrains first a safety assessment executed by a suitably European qualified professional (Department for Business Innovation and skills).
More importantly, when importing food, we need to know about regulations that apply to specific products and more general rules concerning labelling and additives. Failure to comply could cause delay and require action by the enforcement authorities. Using strictly natural products will prevent us to comply with the “additives” part of the regulation. However there is also a banned and restricted product list which will have to be monitored regularly (Food Standard Agency).
World'sFinest subscription box aims to help our consumers to travel and experience a new culture every month through useful, colourful and delightful products from places all around the world. The products will be home-grown and will be collected from artisans as well as partner cooperatives which may be challenging. With Thai tea, Moroccan argan oil or Indian curry powder; each product we that shared with our consumers will be carefully selected.
Moreover the company is devoted to supporting fair trade, artisans and cooperatives from around the world. To help the consumer connect with the different cultures and artisans, every month we will be offering them the storytelling of the product manufacture.
Depending on the company's future performances, potential developments have been identified. It could be the implementation of this subscription box concept internationally and matching the products to the country targeted; and/or developing a partnership with travel operators to provide them our in-house consumer's database for targeted marketing campaigns.
Appendix 1 Global Organic Personal Care Revenues
Appendix 2 Pure Natural box
Appendix 3 Birchbox
Appendix 4 Production costs breakdown
Allsubscriptionboxes.co.uk,. "Fantastic Monthly Subscription Boxes Delivered In The UK". N.p., 2016. Web. 28 Feb. 2016.
Department for Business Innovation and skills, A Guide To The Cosmetic Products (Safety) Regulations 2008. 2010. Print.
Fairtrade.org.uk, "Facts And Figures". Nap. 2016. Web. 28 Feb. 2016.
Forbes.com,. "Forbes Welcome". N.p., 2016. Web. 28 Feb. 2016.
Fung Business Intelligence Centre, In-Depth View Of Subscription Commerce. New York: Deborah Weinswig, 2015. Web. 28 Feb. 2016.
Gahring et al.,1992;Traveler's notes
Kickstarter, "Hello Mazel: Reinventing Jewish...One Box At A Time". N.p., 2016. Web. 28 Feb. 2016.
Kim, J.-H., and S. Jang. "Memory Retrieval Of Cultural Event Experiences: Examining Internal And External Influences". Journal of Travel Research 55.3 (2014): 322-339.
Lohas.com, "About | LOHAS". N.p., 2016. Web. 28 Feb. 2016.
"Outlook For Travel And Tourism Basics For Building Strategies". Proceedings of the Travel Industry Association of America's Twenty-first Annual Outlook Forum (1995): 5-18. Print.2333
Schlossberg, Mallory. "This Controversial New Business Model Is Taking Over Retail". Business Insider. N.p., 2016. Web. 28 Feb. 2016.
Statista, "Attitudes Towards Fair Trade Products In Great Britain 2015 | Survey". N.p., 2016. Web. 28 Feb. 2016.
Transparencymarketresearch.com, "Organic Personal Care Products Market- Global Industry Analysis, Growth And Forecast 2014 - 2020". N.p., 2016. Web. 28 Feb. 2016.
Winter, Caroline. "Subscription Boxes Of Junk: Enough Already". Businessweek.com. N.p., 2014. Web. 28 Feb. 2016
...(download the rest of the essay above)