YBUY raises $1M for "Try Before You Buy" Subscription Service

We recently wrote about the rise of the “try before you buy” business model, and how ecommerce companies are letting consumers try products out before committing to them. Today Manhattan Beach, CA-based try before you buy subscription service YBUY announced $1 million in funding, led by Google Executive Chairman Eric Schmidt’s TomorrowVentures and several angel investors. The company will use the funding to accommodate the list of over 50,000 people now on its waiting list..

YBUY’s model is based on the idea that consumers want to try products out before they purchase them. The subscription service charges users a $49.95 fee to join, then allows users to test products out for a month at a cost of $24.95 per product (free shipping both ways). There’s no monthly charge until a user selects their first product, but after their first selection, they are required to opt out if they don’t want to receive that month’s selection (although they will be adding the option to try a product on a one-off basis). Members can either return the item by the last day of the month, or keep the item and the rental fee is put toward the cost of purchasing the item. “They all say the same thing: they don’t want to deal with the hassle of returns, they don’t want to sift through a million reviews to find the best product for them,” founder Stephen Svajian said in an interview about his feedback from customers on the traditional shopping experience. “It’s not enough just to find out what’s cool, they’re truly not sure whether they want to financially commit, and that’s where we come in.”

Svajian believes that what they’re providing is a service that customers can’t get from traditional online retailers like Best Buy and Amazon – curation. “There’s Best Buy and Amazon fulfilling certain use cases in the ecommerce consumer electronics space, but there’s a use case that’s not currently being filled,” he said, adding that items that customers want aren’t always in store, and the online selection can be too broad. “If you search for an espresso machine and you get 5,600 results that’s not really useful.”

The products, which are curated and tested by YBUY’s team, will eventually number around 200 SKUs. Right now there are a range of new and refurbished products available to test, everything from home and kitchen products, consumer electronics, and outdoor items, and they range from $99 to $600 in purchase price. Some of the current products include a Fujifilm camera, the fitbit wireless activity and sleep tracker, and a Breville espresso maker. The company will also be looking to offer insurance on items, just in case someone rents an iPad and promptly drops it on the floor. Right now shipping is only available in the U.S., though Svajian says they have demand from international members.

The company buys and keeps products in its own inventory, rather than working with manufacturers to provide products based on demand. The company sources products both from well-known manufacturers, as well as up-and-coming product designers that they source from places like Kickstarter. Svajian said today’s funding will be used to support the new influx of members. “It’s primarily going to inventory to accommodate immediate demand for membership, and then we’re adding members to the team, we’re scaling our operations, we’re scaling the product,” he said.

There’s been some indication that subscription businesses are rethinking their strategies, especially one that rope consumers in to buying something every month. And YBUY could face issues with its inventory, since it has to keep inventory on hand, and it’s too early to tell what kind of conversions they’ll see from rental to purchase. But it seems like the “try before you buy” ecommerce model is gaining steam, based on other try at home programs offered by startups including Warby Parker and True&Co. Although the company’s competition might not be other startups, it might be something that is already built into every online retailer: the return policy.

 

 

Erin Bury

Erin Bury

Erin has covered startups and technology for over three years in publications including Sprouter Weekly, The Globe and Mail, Business Insider, Mashable, and VentureBeat. She also writes a regular startup column for the Financial Post, and is a technology expert on CTV News Channel. Before BetaKit Erin worked as Director of Content & Communications at Sprouter from its launch in 2009 until its acquisition by Postmedia Network Inc. She was recently named one of Marketing Magazine's 30 Under 30 in 2012.

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