With ShoeDazzle, Brian Lee has led the recent boom in subscription commerce startups. Now he may be leading the retreat from the category.
First ShoeDazzle, the grandfather of subscription commerce, killed its subscription model in March. As of this week, Lee’s other commerce startup, The Honest Company, is following suit.
Jessica Alba and Lee, LA’s entrepreneur-to-watch, launched the subscription baby goods company earlier this year. This week the company announced it would allow users to shop sans monthly subscription. The subscription option is still available, unlike with ShoeDazzle’s fully dead subscription option. It makes more sense that The Honest Company’s subscribers would want disposable items like diapers delivered to their doors each month. Shoes are slightly less “mission critical” to a woman’s everyday life. If anything, The Honest Company’s category is a clear candidate for subscription success, which makes this move all the more curious.
Both of Lee’s sub-comm companies have raised outsized investment rounds: ShoeDazzle has $60 million under its belt and The Honest Company raised $27 million. As hordes of copycat ecommerce companies adopt his business model, it raises the question — what does Lee know that his followers don’t?
We hit on a few of the drawbacks to the model last month in our argument that subscription commerce is more of a smokescreen than a revolutionary new business model: Customer acquisition costs are high, the cost of customer support is high, and no one wants to be forced to buy something they don’t need each month. And, as we saw with daily deals, twists on the ecommerce business model can lead to consumer fatigue. How many boxes of stuff do we need arriving at our doorsteps each month?
There is an element of convenience, which is especially helpful for the busy parents targeted by The Honest Company. But the ecommerce basics — great merchandizing and top notch customer care — still have to be there first and foremost.
If anyone is positioned to get it right, it’s Lee. He (and Kim Kardashian) helped push ShoeDazzle to more than $5 million in revenue per month after just a few years. He has not only played this game better than anyone — he invented it. It’s hard to imagine that other stuff-in-a-box etailers won’t be following in his footsteps again in a few months’ time.