Why subscription boxes could do well during the pandemic

COVID-19 has upended the retail model. Robin Raskin looks at whether there are longer-term opportunities for these scheduled surprises.
April 2, 2020

I began writing about the potential for subscription services to fill a gap and offer another distribution alternative for kids toys before the COVID-19 pandemic. At the time, I thought it was an alternative way to “schedule delight” for busy families: a package of  unknown goodies, not unlike mystery grab bags, is delivered on specific days in the mail.

Now that we are living in unpredictable times, I see that subscription services for kids are turning into a lifeline for despondent parents. All of the subscription services I spoke with are experiencing an uptick in members now, and for obvious reasons: They arrive at the house without families having to leave for pickup, with minimal human touch, and in answer to a parent’s specific need. Toy subscriptions and online services for kids providers can offer predictability, constancy and quality.

At the recent New York Toy Fair, I took note of emerging subscription models from Namco Bandai, Pinna (audio book club for kids) and Kiwico (pictured). At a panel moderated by parental publishing platform Fatherly’s Michael Rothman, the pre-pandemic talk was around the shared challenges and opportunities the models presented for the toy industry.

The point of subscriptions is “anticipation and repetition,” said Rothman, framing the conversation.

Pinna is an audiobook, podcast and music subscription service for kids. After a long career at Scholastic, CEO, Maggie McQuire realized discovering good kids content on the web was a slog that required hunting and pecking through Netflix, Spotify, Amazon and dozens of others. Pinna carefully curates content from well-respected book publishers along with some its own original stories.

To get the word out, Pinna took a data-centric approach. From the get-go, the company surveyed moms and teachers to develop the value proposition. There are no ads on the site, you get a month’s free trial and then a US$9.95 monthly charge. Added benefit? It gets kids listening and their noses out of their screens.

McQuire reports that the onset of COVID resulted in “an unprecedented week of outreach to Pinna from across the nation, and globally, as families and teachers alike are searching for meaningful digital resources for their kids and classrooms to keep learning going at home/remotely.” The company has added free resource lists and round-ups and parents and teachers and is working on additional resources to augment the podcasts.

Similar tech-based services, like Hoot Reading (reading material vetted by teachers), Tinkercast (kid-appropriate podcasts) and even Bandi Namco (which provides subscription services to a motion-sensing mobile game for the family) are also reporting similar upticks as parents seek out new activities for their at-home kids.

Like SVODs, digital subscriptions makes sense. So what do these boxes mean for physical play? KiwiCo has been delivering STEM based activities monthly. Kids get a box with all the pieces required to complete a project, like building a ukulele (pictured) or creating an x-ray skeleton. Each package is chock full of visual and printed instructions for constructing the project.

Lisa Hom, the company’s chief product and merchandising officer, says each projects is designed to be challenging, but not overwhelmingly difficult, and the product and the activity suggestions feel playful and whimsical with a focus on age appropriate explorations.

Catching up with Hom during the COVID crisis, she acknowledged that the company is “seeing a huge spike in subscriptions and one-off purchases” in its eCommerce store. “Parents are looking for solutions as they have suddenly had to homeschool kids and potentially work from home as well,” she added. To help address the demand, KiwiCo launched a resource hub for parents, and Hom says the site initially crashed from all the traffic.

Other popular kids subscription kits include Little Passports, an US$18 per month box of fun focused on exploration, travel, geography and more; Literati, which sends out five books curated for each child, with parents  only paying for the books they want to keep (US$10 a month plus the cost of the book) Bitsbox, which delivers monthly coding projects in a box, beginning at US$25 a month.

And these boxes may provide opportunities beyond smaller startups: LEGO lovers can’t get a subscription from the brickmaker, but they can subscribe to BrickLoot. The company packages themed LEGO projects in inventive ways, beginning at US$25 a month.

In the adult retail world, direct to consumer (DTC) was becoming a bigger part of the retail experience even before COVID. Services like Flamingo (hair removal), FabFitFun (athletic wear), Winc (wine) and  StitchFix (clothing) were offering regularly scheduled, curated packages with considerable success.

The kids industry was a bit slower to adopt the model, but my hunch is that this channel will only get stronger, even once the pandemic is over. With struggling retail channels and the rising cost of shelf space, kids companies may fare better focusing their marketing efforts on creating an engaged and loyal repeatable audience. Unlike other distribution channels, the challenge is to create a trusted bond based on careful curation and expertise.

They say that in times of great crisis comes great change. One of those changes may be a new distribution model for toys. Robin Raskin is the founder of Living in Digital Times, a conferences and events company devoted to looking at the intersection of technology and lifestyle. The company was acquired by CTA (the Consumer Technology Association) in January.

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