How MeUndies convinced people they need an underwear subscription
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If you’re one of 40,000 MeUndies superfans, you may have upwards of 50.
In MeUndies membership time, that’s more than four years of brand loyalty and a drawer overflowing with MicroModal, “softer-than-soft” underwear. Some people have replaced their entire underwear collection with their MeUndies subscription.
Since 2011, MeUndies has sold more than 17 million pairs of underwear––nearly 25% of which were purchased in 2020. MeUndies CEO Jonathan Shokrian is seeing the benefits of his commitment to the slow, thoughtful growth of the company, which he founded after buying a pair of ill-fitting Calvin Klein underwear before a vacation.
Raising only $10 million prior to 2020, MeUndies has kept itself afloat mainly through its own cash flow and a credit facility (the company recently received $40 million from investment group Provenance). It took nearly five years for the company to see a profit, but MeUndies hit its stride in 2020 when sales reached $100 million––up from about $75 million in 2019.
So … how did they do it? How did they convince people to invest in a subscription for underwear?
Keep reading to find out how MeUndies became the world’s first and most successful underwear subscription brand. You’ll also learn more about the recent explosion of DTC subscription models, and what to watch for in 2021 and beyond.
The DTC subscription secret sauce: what to know
The subscription e-commerce market is booming.
Subscription business revenue outpaced that of S&P 500 companies and U.S. retail sales by five times (18.2% versus 3.6%) from January 2012 to June 2019.
In 2018, McKinsey reported that the subscription market has grown by more than 100% per year since 2013.
While many business consultants have conducted detailed analyses on why subscription models are thriving, it doesn’t take much to determine why.
The answer is convenience.
The year 2020 was the year the world stayed home––and ordered online. It was also the year we felt overwhelmed, overworked, and over it. Subscription models have become one small way to:
- Automate purchases that are both essential and indulgent
- Boost our mental health with monthly gifts to ourselves
- Give gifts to our loved ones whom we can’t visit in person
If you’re thinking about starting your own subscription brand or pivoting to a subscription model, here are three things companies like MeUndies focus on to achieve success.
#1 Subscription brands build long-term relationships with their customers––and learn from them
Customer loyalty is a built-in component of every subscription model. But it comes at a cost.
Subscriptions are commitments. The customer who impulse-buys some lip gloss from an Instagram ad is not necessarily the same person who will commit to a monthly wellness box like Birchbox.
Subscription buyers have longer consideration periods. Audiences may orbit around a subscription brand’s online presence for months or even years before buying in––but once they do, their lifetime customer value (LTV) can offer predictable revenue.
After a subscription customer has been acquired, brands are provided with two opportunities (and priorities):
- Deliver a superior customer experience to ensure retention.
- Seek feedback from long-term customers to make their products better.
To retain and learn from customers, MeUndies stands out in several ways:
- Constant novelty: While MeUndies will be the first to admit they’re not on a set schedule, they typically release one new print per week. They discovered that people who subscribe to MeUndies don’t need a new pair of underwear every month. What they’re seeking instead is novelty, and MeUndies delivers.
- A solid price incentive: While you can purchase underwear a-la-carte through MeUndies, a membership provides a 30% discount and exclusive access to new prints.
- An expanding product line: MeUndies saw massive pandemic success by doubling down on the loungewear category. According to CEO Jonathan Shokrian, MeUndies’ loungewear sales grew nearly 100% since March, as customers spent more time at home.
#2 Subscription businesses house predictable customer data––so they can make better decisions
With predictable customer data come smarter business decisions.
Customer LTV and tiered macro pricing are solid signals for how much subscription brands should spend on acquisition to make a profit, during peak revenue seasons like the holidays and slower periods such as January until Valentine’s Day.
Subscription brands should be obsessed with their customer data because they know it’s “cleaner” than those of other DTC brands. Where subscription brands win with data is cross-selling.
When your customers live within clean LTV segments, you’re able to reward your most loyal customers with special perks––and more referral discounts. No marketing tactic is more effective than word of mouth, and clean customer data is the tool you need to effectively stimulate it.
#3 Subscription brands are marketing daredevils
When Dallas Cowboys running back Joseph Randle was caught stealing underwear, MeUndies reached out to partner with him on an ad campaign.
Then, when Seahawks running back Marshawn Lynch was fined $20,000 for grabbing his crotch at the Super Bowl, MeUndies saw an opportunity to match the fine with a donation to the football player’s charity, Fam 1st Family Foundation.
Rather than paying millions of dollars for a Super Bowl ad, MeUndies gained a similar level of exposure for a lot less ad spend when they released a statement about eliminating “the need to readjust down there.”
When Facebook blocked some of MeUndies ads for inappropriate content, MeUndies responded with a cheeky ad of their own on censorship … and saw 3–5 times higher clickthrough rates.
After 2014, MeUndies shifted a full third of its marketing budget away from Facebook ads entirely to podcasts … and they sold 9 million pairs of underwear from 2015 to 2019, compared to 1 million during its first three years in business.
MeUndies, just like many subscription brands, understand the value of acquiring a customer––and they’re not afraid to be bold in building their brand. When one customer can mean thousands of dollars in lifetime value, the incentive to experiment is high.
Other DTC Subscriptions to Watch
Sniph: Try and discover new fragrances every month.
Smol: High performance, eco-friendly cleaning products.
Cocofloss: Floss service that delivers innovative floss straight to consumers.
Yumi: Fresh, organic, and nutrient-dense food for babies delivered weekly.
Curology: Customized prescription skin care.
How many pairs of underwear do you have?