The rapid growth of retail subscription services could be coming to an end

TRADE COFFEE shifted under 1m bags of whole and ground beans between beginning operations in April 2018 and the start of the pandemic in March 2020. By the start of 2022 it will have sold another 4m or so, says its boss, Mike Lackman. It has benefited from a covid-era craze for subscriptions. Confined at home, consumers round the world hit “subscribe” on all manner of boxes delivered to their doorsteps, from drinks and meal kits to scented candles, razors and underwear. Sales in America surged by over 40% during 2020 to $23bn according to eMarketer, a research firm. But hanging on to those customers as lockdowns start to ease will be hard.Investors like a business which offers recurring sales and oodles of data on customers. The Subscription Trade Association reckons global revenues grew at an average annual rate of 17% between 2014 and 2019. That encouraged venture-capital firms to invest close to $3bn worldwide in online subscription firms between 2018 and 2020, according to PitchBook Data. But finding customers is pricey and keeping them has proved hard, given high cancellation rates among those who find themselves tossing away unused products at the end of the month. Shipping costs nibble away at margins.