From subscription boxes to membership programs, pay-to-play models have become a popular way for retailers to differentiate themselves and build customer loyalty — but only if they can prove their value.
As the marketplace for these types of services gets even more crowded — with start-ups offering recurring deliveries for everything from apparel to dog treats — subscription companies will need to show shoppers that their services are not only worth signing up for, but renewing.
But these fledgling companies aren't the only ones at risk of losing relevancy with shoppers. Established warehouse retailers are also feeling the heat from the explosive growth of Amazon Prime, which recruits millions of U.S. households for its $99 service each year.
Even as Costco's renewal rates have held steady near 90 percent, recent research from Cowen and Co. shows Amazon is wooing shoppers who once belonged exclusively to its warehouses. Cowen's research shows the same effect at Sam's Club.
This type of shift is an early indication that these deep-rooted retailers could be vulnerable down the road, as shoppers may look to consolidate the number of memberships they pay for, Leon Nicholas, chief insights officer at Kantar Retail, told CNBC.
"She may be opting out of the ones that seem more frivolous to her," he said.
A shakeout is already underway among the smaller subscription box players. A recent report by CB Insights mapped out funding at 57 start-ups selling subscriptions for physical goods. Collectively, they've raised more than $1.4 billion, the intelligence firm said.
But as more players enter the market, the success of these businesses has varied widely. Whereas Dollar Shave Club was acquired by Unilever for $1 billion, the celebrity-focused Beachmint site — which had raised nearly $75 million in four rounds of funding — was shuttered.