Online personalization pioneers popular business model

Mark Anbinder, Editor-in-Chief

Online subscription businesses are not a new concept to most. You pay a certain amount of money via online credit card transaction and receive a certain product or service every month, week or other specified amount of time. Your card will then be charged accordingly. 

However, in the past year, many start-ups have decided to spin this business model in a new direction. Businesses like Warby Parker, Gainful and Curology all operate mostly or entirely over the internet, incorporating a survey and a custom product or plan to their subscription service. This model is popular for most products, ranging from a plethora of categories, as the three aforementioned websites cater to fashion and eyewear, fitness and health respectively. 

“Business just started to recognize that they can capture this part of the market on a monthly basis,” business teacher William Hansen said. “They know they’re going to have a constant revenue stream.” 

A recent trend in customized subscriptions is food sales. Websites like Freshly, Huel and Oats Overnight all give you options on a screen, similar to a menu, and send you prepackaged meals to eat. While some websites like Freshly choose to focus on full meals, others focus on smaller portions or meal substitutes. 

“It sounds like a cool idea,” junior Kacper Orlowski said. “It’s subscription based so they’re guaranteed to be paid monthly as long as they keep customers.”

  These websites seem to focus on attracting a specific demographic, most targeting fashion and fitness conscious people. They boast low carb, keto and protein products  frequently. For example, Oats Overnight, a company dedicated to mailing prepackaged overnight oat pouches, use the protein content in their oatmeal as a major selling point. Additionally, Oats Overnight boasts the quality of their ingredients as well, mentioning Maca and Flax seed, desired ingredients in their market, as something that makes their oatmeal stand out from the competition. Huel, a company selling alternative meals and protein products, also lists “low carb” as their first and foremost feature, addressing what they think their target audience would find most attractive. 

“[Businesses] are going to have to be constantly revising their products. With something like an oatmeal or protein powder, customers will grow to expect something new,” Hansen said. “They’re gonna have to adapt to their customers expectations and I think they’ll struggle to keep people for the long term.” 

Whether or not companies like this will see future success, many, like Hasnen, agree it’s an intriguing business model. These companies thrive on getting their customers to think they are just the product they needed or have been waiting for and in many cases, they make a good argument. Many younger people, whom companies target as their chief customer base, see a product they want to already have, but with new or unique features that they consider convenient or worthy of a purchase. One prominent way new businesses reach younger consumers is via social media ads.

“I see a lot of ads for clothes and facial products,” Orlowski said. “I’ve noticed it’s usually stuff based on what I’ve looked up, almost in the way internet cookies work. I wouldn’t really be against signing up; most have free trials just to try their product.” 

The inflated prices of these products is also worthy to note as these businesses charge a larger sum of money than their in-store competition. The justification being that you pay extra for convenience and customization. Take Oats Overnight for example, which charges 3.82 per pouch of oatmeal, as opposed to store bought instant oatmeal, which hovers around or less than a dollar per pouch on store shelves. Meal prep service Freshly charges between $7.99-$11.50 per meal, more expensive than most home cooked or fast food meals. 

Advertising over the internet is not a new idea by any means, however the increase in social media ads, especially on Instagram, is staggering. Almost all of the aforementioned companies use Instagram as a main part of their advertising strategy, reaching their target demographic by using an app they check almost every day. 

“It’s useful and easy to advertise through social media, but it’s a little creepy,” senior Jack Duggan said. “The data you give them could eventually be passed on to others.” 

These ads operate much like internet cookies you see on google, which use information gathered from your previous searches to target ads to your screen in hopes you will buy their product and give the site you saw the ad on some extra revenue. Internet cookies have long been an ethical controversy as many users argue their search data shouldn’t be exploited for the gain of businesses. 

Regardless, it’s important to confirm the legitimacy of a site before putting any personal or sensitive information into it. While many sites that advertise on social media are legit businesses, they also might not have a dedicated following of users who can vouch for the usefulness of a specific product. Doing research on a specific product before buying could save money and increase your sense of security by ensuring that you are getting your money’s worth before pressing the “confirm order button”. 

“You don’t know what else they could use your data for,” Duggan said. “You just have to watch out for businesses like this, make sure you actually need it before buying a lot of stuff.”