DTC

Has DTC brand Jolie found the secret to subscriptions?

The beauty and wellness brand expects to bring in between $25 million and $30 million by the end of its second year in business.
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Jolie

· 4 min read

“Set it and forget it”: This common phrase demonstrates the desire for convenience and a worry-free consumer experience.

For e-commerce retailers, subscriptions can provide a more reliable revenue stream. A 2022 report found that 75% of DTC brands will offer subscriptions this year, but as to what percentage of those programs are effective? That’s a different question.

Jolie, a beauty and wellness brand that sells shower filters, believes it’s found a model that works given its product offering, a subscription software platform, and the diversity of its distribution channels. Founder and CEO Ryan Babenzien told Retail Brew a major pitfall for brands offering subscription services is the lack of value added for the consumer.

“There [are] many, many subscription businesses, and they pretend or communicate that they’re out of convenience—and that’s partly true—but there are just certain things that you don’t need on some frequency,” he said. “Apparel is probably the greatest example. Yeah, there are subscription apparel services, but you really don’t need that.”

Time for a reset: Jolie’s shower filters, which appeal to those who don’t want materials like chlorine and heavy metals in their water that can damage or irritate the skin and hair, need to be replaced every 90 days, so it makes sense that customers who value the product will want to sign up for a subscription, Babenzien said.

  • He said about 80% of Jolie’s customers are subscribers on first purchase, and the company has a less than 3% churn rate in the 20 months since its launch.
  • A report from subscription-billing software company Chargebee found that 42% of DTC companies see a churn rate of more than 3% on a monthly basis, and 16% of them see 4% or more. Chargebee’s CMO Guy Marion told E-Commerce Times that the average churn rate is almost 6%, nearly doubling from before the pandemic.

To date, Jolie has sold more than 100,000 of its filters and expects to bring in between $25 million and $30 million by the end of its second year in business, according to Babenzien.

“The subscription is really a perfect mechanism to make sure that your filter is in good working order, and not having to think about it, and making it both convenient and practical,” he said. “I think the reason we were so successful is because of the value proposition that we provide to the customer.”

Unforgettable: Jolie uses the Shopify subscription software app Smartrr, which offers its users customizable subscription options, loyalty and referral programs, and the ability to create custom bundles.

  • Smartrr co-founder and CEO Gabriella Tegen told Retail Brew that many brands and small businesses struggle with subscriptions because they oversimplify an experience that requires a more grounded understanding of how consumers shop and how they want to interact with the brands they shop.
  • Rather than predicting what consumers will want, Tegen said Smartrr uses data to understand consumer behavior, providing its merchants a more accurate lifetime value (LTV) figure—an estimate of average revenue a customer will generate throughout their time as a customer.
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“‘Subscribe and forget. Don’t let your consumer cancel. Give them a 10% [discount] to subscribe instead of buy one time’—those are things that you probably see all the time as a consumer, but you can’t make blanket statements about a business,” she said.

Zoom out: Babenzien said he doesn’t view the company as solely DTC, given its product is also found at Amazon, Goop, Erwan, Revolve, Blue Mercury, and Nordstrom. He said the company plans to expand its other distribution channels, whose customers hopefully become subscribers after that first purchase.

  • “Direct to consumer is a distribution channel; it’s not a business model…There are very few 100% DTC businesses, and there’s even fewer, if there are any, that are actually profitable,” he said. “I think it’s really important for brands who have a multi-distribution strategy to be successful.”

+1: As of late, Jolie has some competition in the market in the form of Canopy’s new filtered shower head that it introduced at the start of the month. Like Jolie, Canopy has a subscription offering that replenishes every 90 days, and the company also claims benefits such as supporting healthier skin and hair care.

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.