Under the Influence with Terry O'Reilly - S7E04 - Underwear In Your Mailbox: Subscription Marketing

Episode Date: January 26, 2018

This week, we delve into the emerging world of subscription marketing. Did you know you could have underwear sent to your door every month? How about joining the Salami of the Month club? Or maybe your cat needs a regular toy top-up. You can subscribe to just about anything these days - and some of the items may surprise you. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please, do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan, you just have to love storytelling.

Subscribe now, and don't miss a single beat. From the Under the Influence digital box set, this episode is from Season 7, 2018. You're so king in it. Your teeth look whiter than noon, don't they? You're not you when you're hungry. You're a good man with a heart.

You're under the influence with Terry O'Reilly. When my brother and I were growing up in Sudbury, Ontario, there was a corner store near our house. It stocked the usual convenience items, but it also had a magazine rack. One day, my brother and I discovered a magazine called Famous Monsters of Filmland. It was dedicated to monster and science fiction movies. We were enthralled.

The cover always had fantastic illustrations of movie monsters like Frankenstein, Dracula, or the creature from the Black Lagoon. At the beginning of every month, we'd race to the store with our two quarters in hand to pick up the latest issue. One month, we were heartbroken to discover the magazine wasn't there. When we asked the store owner why, he shrugged his shoulders and said

he stopped ordering it because it wasn't a big seller. None of our other friends read Famous Monsters of Filmland. It appeared to be just our obsession. So, my brother and I pooled our allowance money and paid for a subscription. It was the first subscription I ever had.

Famous Monsters of Filmland was founded in 1958 by Forrest J. Ackerman. Ackerman was a longtime horror movie fan. When he came up with the idea for the magazine, he took it to 13 different magazine distributors and was turned down by all of them. Then, Life magazine did an article about the new trend in horror films aimed at adolescents. One distributor read the story and said to Ackerman,

Put monsters on the cover, aim it at teenagers, and we're in business. So that's what Ackerman did. He put the first famous Monsters of Filmland issue together in 20 hours on his kitchen table. The magazine was distributed in New York and Philadelphia only as a test. The day it hit the stands, a huge snowstorm shut the cities down. Ackerman thought the magazine was doomed. But four days later, fan mail started pouring in asking when the next issue was coming out.

Famous Monsters of Filmland was on its way. While my brother and I thought we were the only ones reading the magazine back then, we clearly weren't alone. Stephen King has said he inhaled it as a kid and memorized every issue. Directors Steven Spielberg, George Lucas, Tim Burton, Guillermo del Toro, and Peter Jackson were all huge fans. Metallica's Kurt Hammett subscribed. So did Kiss Bassman Gene Simmons and Magician's Pen and Teller. Founder Forrest Ackerman also collected horror memorabilia and amassed over 300,000 items.

He kept it all in his mansion in the Hollywood Hills, and every Saturday morning he would invite fans into his home for a tour. When you buzzed his gate, he would answer through the intercom saying, Who dare disturbs the tomb of the vampire? When you announced your name, he buzzed you in. Famous Monsters of Filmland's

original run was from 1958 to 1983. Ackerman published 190 issues in total. It has had a few iterations since then, and I see a podcast on iTunes. But that original magazine, with Vincent Price or the Wolfman on the cover, was one of the thrills of my youth. And it was the very first subscription I look forward to every month. Today, lots of people still look forward to their subscriptions every month. But they aren't waiting for magazines. You can now subscribe to food services, a cannabis company, a condom maker,

and even have fresh underwear delivered to your door monthly. The world of marketing has elbowed its way into the subscription business, and those subscriptions are disrupting the retail industry because they're doing monster business. You're under the influence. While many main street retail stores struggle these days, online-only stores continue to exert pressure. One of the more interesting offerings of those online stores is the new wave of monthly subscription services.

Today, you can literally subscribe to almost any kind of product and have it delivered to your door every month. And some of those products may surprise you. But subscription marketing actually has a long history. Harry Sherman was born in Montreal and raised in Philadelphia. During the 1920s, he earned his living writing ads at advertising agency J. Walter Thompson. While there, he learned the fundamentals of mail order promotion,

which was a big aspect of marketing back in the 20s. Harry Sherman also had a love of literature. He loved to read, and one day, an idea popped into his head. He wondered if he could sell books to the public via mail order.

His first attempt at it failed, but in 1926 he tweaked his idea and tried again. He christened this company the Book of the Month Club. Sherman had a list of 4,700 subscribers left from his first failed business, so he sent them a book titled Lolly Willows by author Sylvia Townsend Warner. Word soon spread that the Book of the Month Club was curating worthwhile books, and by the end of 1926, Harry Sherman had 46,500 members

and net sales of over half a million dollars. One of the reasons the Book of the Month Club grew so quickly was because people at that time didn't have easy access to libraries or bookstores. Sherman also had an insight. He believed book lovers didn't read as many books as they wanted to. He had a hunch there were millions of prospective readers out there who would spend money on books, but didn't know which were the right books to ask for.

One of the club's early advertisements tapped into that anxiety, saying, What a deprivation it would be to miss reading an important new book at a time when everyone else is reading and discussing it. Other book club ads popularized the idea that displaying the right titles on one shelf was a sign of status. Sherman assembled a panel of literary experts who would select the best title from that month's new releases, and that book was delivered to subscribers' homes.

By 1928, membership crossed the 100,000 mark. It even held its own during the Depression years. And by 1946, the Book of the Month Club had close to 900,000 subscribers and it shipped its 100 millionth book three years later. The Book of the Month Club became a trendsetter and tastemaker for generations. This introduction to subscription marketing helped the concept of subscriptions take off, and soon people were subscribing to magazines, newspapers, and eventually even records, tapes, and CDs. A lot has happened since the Book of the Month Club mailed its first novel.

As of April 2017, subscription websites had about 37 million visitors. Since 2014, that number has grown by over 800%. It's estimated that there are over 10,000 subscription companies on the market today. But today's subscriptions are very different from the days of books in the mail. For starters, these new subscription boxes arrive at your doorstep every month and are curated by experts. Depending on the company, the box contains

five to eight items that are worth much more than the monthly subscription fee. So, if you pay, say, $10 per month, you may receive over $50 worth of products.

Many subscription companies don't tell you what's in the box. You subscribe, tell the company about your preferences, and a mystery box appears every month. Subscribers love the surprise and anticipation of opening a box and not knowing what's inside. Many of these subscription boxes contain samples of new products from a variety of companies.

Manufacturers happily give away samples in these boxes, knowing the subscribers are avid fans and influencers. Plus, a curated box gives manufacturers a focused experience with potential customers, instead of the cluttered environment a department store offers. For the subscription companies, it's a profitable business, as cost of goods is minimal and largely subsidized by major brands. The key is to charge a low monthly subscription fee and fill those boxes with high-quality products and a wow factor. The most popular subscription site in North America was started by someone who couldn't get a job.

Back in 2007, 20-year-old Michelle Fawn was a makeup lover eager to break into the beauty business. She had given makeovers to her family and friends and loved the way they reacted to their new looks. So, she decided to apply to department stores as a makeup artist at their beauty counters. But Fawn was rejected by every single one, mainly due to her lack of experience. So, she went home and opened her laptop.

Fawn started a YouTube channel, posting videos of herself applying makeup. And, after being reposted by a few major brands, her channel skyrocketed to over a million followers. That's when Fawn co-founded Ipsy, a unique subscription service for beauty lovers across North America. Ipsy is a play on the Latin word for self. Subscribers pay just $10 a month for glam bags that arrive every 30 days. They contain over $50 worth of makeup and skincare products delivered right to their door. The bags include both samples and full-size items by the world's leading cosmetics brands.

Since launching in 2011, Ipsy has amassed over 3 million subscribers. The key was to create the Ipsy experience. New users log on to the website and take a fun two-minute beauty quiz to personalize their Glam Bag products. They're asked questions like, what is your eye color and what brands would you like to try?

Subscribers are also provided with articles and videos demonstrating different ways to use their Glam Bag products. Ipsy has a 10,000-person network of amateur beauty vloggers paid to create content for Ipsy and to promote Ipsy on their own websites. These vloggers can generate a staggering 300 million social media impressions in a single month. Thus, Ipsy does very little traditional advertising. Cosmetics companies pay Ipsy to put their products into glam bags

and have influencers show their viewers how to use them. It's a win-win. Ipsy also asks for feedback on their glam bags, so it can provide brands with detailed reports on how well their products tested. As of last year, the company expanded its experience to also offer an exclusive Ipsy shop to subscribers, where users can order more products online than they got in their glam bags. Once you're an Ipster, you're part of a massive community of brands, subscribers, and influencers.

People join for the glam bags, but stay for the experience. Today, Fawn's YouTube channel has almost 9 million subscribers and the Ipsy subscription business is worth $500 million. A unique brand born of rejection. And that's the beauty of it. Kind of like finding underwear in your mailbox. And we'll be right back after this message. If you're looking for flexible workouts, And we'll be right back after this message. New routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest.

And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. Bet MGM is an official sports betting partner of the National Hockey League and has your back all season long. From puck drop to the final shot, you're always taken care of with the sportsbook Born in Vegas.

That's a feeling you can only get with BetMGM. And no matter your team, your favorite skater, or your style, there's something every NHL fan is going to love about BetMGM. Download the app today and discover why BetMGM

is your hockey home for the season. Raise your game to the next level this year with BetMGM, a sportsbook worth a selly, and an official sports betting partner of the National Hockey League. BetMGM.com for terms and conditions. Must be 19 years of age or older to wager. Ontario only. Please play responsibly.

If you have any questions or concerns about your gambling or someone close to you, please contact ConnexOntario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGamingOntario. If you're enjoying this episode, why not dip into our archives? Available wherever you download your pods. Go to terryoreilly.ca for a master episode list. These days, you can subscribe to just about any kind of product and have it delivered right to your door.

The second most subscribed to site in North America is Blue Apron for food deliveries. Then there is laparcel.com for feminine hygiene products, unboundbabes.com for a monthly delivery of female sex toys, the Dollar Shave Club for razor blades, and the Dollar Rubber Club for condoms. Subscriptions include a monthly 3-pack, a 6-pack,

or a 24-pack of condoms delivered to your doorstep every month. And if you're considering that last option, you just might need a subscription to Blue Apron to keep your energy up. Question. Have you ever dreamed of having underwear might need a subscription to Blue Apron to keep your energy up. Question. Have you ever dreamed of having underwear delivered monthly?

Me neither. But there's a big change stirring in your drawers. Jonathan Chakrian was working in commercial real estate and was traveling a lot. Just before a big trip, he went to a department store to buy some underwear. He found the whole underwear shopping experience uncomfortable, inconvenient, and found himself overpaying for what was deemed to be premium underwear, which it was not. Then, he had an aha moment.

Men needed a hassle-free underwear shopping experience. So, in 2011, he started MeUndies.com. Chakrian based his company on a few interesting insights. First, he noted that men don't really have any strong attachments to underwear brands. He also knew that men tend to have more underwear than any other article of clothing, and those undies need to be replenished. Plus, guys are more likely to sign up for subscription underwear because they don't really pay attention to how much underwear they need.

All that made the underwear industry ripe for disruption. The MeUndies subscription starts at $14 per month. It gives you three style options. You can have classic, bold, or adventurous underpants delivered to your door every month. MeUndies advertised primarily on Facebook, but its ads kept getting pulled by Facebook because of its scantily clad underwear models. So MeUndies responded by mocking this censorship, saying its ads were, quote, too hot for Facebook. Then Facebook told MeUndies it wasn't allowed to use the word Facebook in its marketing. So, MeUndies created a commercial using stick figures instead of models

that said, quote, too hot for FB. Facebook said it couldn't use FB either. But MeUndies didn't care by that point. The parody ads got click-through rates three to five times higher than the ads with the models. Their business grew by 188% this year, and it shipped five million pairs of underwear. But it's not the only player in the game. Skivvy Knicks is a $20 per month underwear subscription site for women. Like MeUndies.com, it too offers three cuts.

T-Bone, Tenderloin, and Rump Roast. Hello. Skivvy Knicks is so excited about their product, they even have a countdown clock on its site telling you when the next shipment is going out. And as you can guess, the founder is a big Fleetwood Mac fan. Then there's Naughty Knickers. Based in Toronto, it offers three packages, Naughty, Nice, or Mixed.

Other companies include Boutet Bag, My Junk Trunk, and the Curated Underwear Club. Which means, somewhere, someone's job description is underwear curator. All subscription services deliver their undies in discrete, unmarked boxes. And they are ready 24-7 to automate all your underwear needs. One of the main keys to the success of subscription marketing is how niche the offerings are. For example, there is a Salami of the Month Club. Every 30 days, you can get a surprise box of salami

delivered right to your door from OlympiaProvisions.com. If you are a budding saloomist, and yes, apparently that's a word, the Salami of the Month Club will send you a box of handmade salami from the 12 gourmet varieties on their menu. And each box comes with tasting notes. You can choose how many coils of salami you prefer on your doorstep, one, two, or three. The meat is antibiotic-free, naturally aged, held in natural casings,

and maintained in the organic white mold that protects them. I'm told that's a good thing. The salami of the month club has been written up and praised in the New York Times. Then there is the Kitnip Box. This is a subscription for cat lovers.

For $19.95 per month, Kitnip will send you a box of goodies for your cat. You get five items in each box, which includes things like a handmade felt Katnip bell, a couple of fun toys, a caterpillar kicker that your cat can bat around, and grain-free turkey treats. And if you have more than one feline, you can order the Multi-Cat Kit-Nip Box, which includes everything you've just heard, plus a Play and Squeak toy mouse, a light-up toy that will play with your cats even when you're away, and a super-sized caterpillar kicker.

You never know what you'll get each month, so your cat will be constantly surprised. Then there's the Moss of the Month Club. For around $125 per year, you receive a sandwich bag full of assorted moss and lichens, worth $10 to $15 every month. There is moss for terrariums and bird planters, and there are all kinds of moss varieties,

like tree branch lichens, pillow moss, cushion moss, mood moss, and black lichen. You can give the gift of moss for Christmas, birthdays, or anniversaries. Or, as the website says, it's the perfect gift for anyone who is hooked on moss. The bad news? They don't ship to Canada. Speaking of green plants, cannabis legalization is on the horizon. So it should come as no surprise there is a subscription service available.

It's called Cannabox. It was founded by Michael Burke and his wife Michelle in 2013. Burke used to be in the insurance business, but now he's in the weed business. Burke saw an opportunity to build a business in anticipation of the coming legislation. Slogan? Treat yourself to a smoking gift every month. Every can of box is a mystery box. Subscribers don't know what they'll get every month.

But this they do know. For less than $20 per month, they receive about $60 worth of merchandise. There are usually six to nine items in every box. Each month has a different theme. It could be gear from your favorite TV shows, movies, or games, all with a cannabis theme. For example, one box had a Breaking Bad theme with Breaking Bad weed paraphernalia instead of meth paraphernalia. Surprise items for 420 enthusiasts may include rolling papers,

pipe, bubbler, wraps, grinder, or apparel, and none of it will be available in stores. I know what you're wondering, and no, there is no weed in the boxes yet. But when legal, Canabox will approach every commercial grower to provide samples. Like underwear companies, everything is shipped monthly in a discreet box, and it does not say Canabox anywhere on it. While Canabox doesn't have hundreds of thousands of subscribers yet, it does boast one thing.

It has a 100% retention rate. Then there's the Bacon of the Month Club. The Bacon of the Month subscription offers not three, but five different plans. It stocks over 1,200 bacon and bacon-related items. There is Bacon Toffee, Bacon Cookies, Bacon Apple Pie, Bacon Pretzels, Bacon Candy, Rice Krispie Bacon Squares, Bacon

Brownies, Bacon Popcorn, and Don't say it. Yes, Bacon Coffee. As the Bacon of the Month website says, Yes, it's true. No need to pinch yourself. You're not dreaming. Imagine getting gourmet bacon delivered to your door.

Yeah, we've read your mind. Oh, bacon. When you subscribe, you get two pounds of bacon delivered to your doorstep every month along with a book of bacon recipes. And you get a stylish t-shirt in your first box that says, Bacon is meat candy. Each monthly delivery surprises you with different kinds of bacon, hand-rubbed with spices like Cajun, apple cinnamon, honey barbecue, brown sugar, and good old hickory smoked.

The bacon is cured to remove the water, so when you cook a pound of bacon, you get a pound of bacon. The Bacon of the Month subscription exists to fulfill all your bacon fantasies. There is even a wedding package option, in case you want to give the gift of bacon to a newly married couple in order to start their marriage off on the right hoof. The subscription business contains an interesting duality, predictability and unpredictability. For companies, subscriptions provide a steady and predictable revenue stream.

But for customers, it's the unpredictability of the monthly boxes that holds the allure. There are not many traditional companies that would ask customers to pay for mystery products, and not many traditional customers who would be willing to pay for a box of surprise items. But that's one of the defining features of online subscription companies. It appeals to a certain type of shopper, one that is happy to give over very personal information

in order to receive a box of surprise goodies every month. Tell Ipsy a little about yourself, and an interesting box of cosmetics shows up on your doorstep. Tell Canabox you're a 420 enthusiast and a surprise box of weed-related paraphernalia is delivered.

Tell MeUndies.com that you like adventurous underwear and an underwear curator will send you bold gotchies in your mailbox every month. It's mass customization mixed with the element of surprise. Or what famous monsters of film land might call a little delicious suspense. When you're under the influence. I'm Terry O'Reilly. Under the Influence was recorded in the Airstream Mobile Recording Studio.

Producer, Debbie O'Reilly. Sound Engineer, Keith Ullman. Theme music by Ari Posner and Ian Lefevre. We'd like to see your mug shot. Man, that's hunger heaven. Every purchase supports the show. We appreciate it. more than diet and exercise. It can also be about our genetics, hormones, metabolism. Felix connects you with online licensed healthcare practitioners who understand that everybody is different and can pair your healthy lifestyle with the right support to reach your goals. Start your visit today at Felix.ca. That's F-E-L-I-X.ca. Whether you're in your running era, Pilates era, or yoga era, dive into Peloton workouts that work with you. From meditating at your kid's game to mastering a strength program, they've got everything you need to keep knocking down your goals.

No pressure to be who you're not. Just workouts and classes to strengthen who you are. So no matter your era, make it your best with Peloton. Find your push. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca.