The Value of Adding A Subscription Model to Your E-Commerce Business
The number of online buyers signing up for subscription services is steadily climbing. With millions of people subscribing to SaaS platforms like Netflix and Disney+, the concept of paying a flat monthly fee for a service or product you enjoy just makes sense to consumers. So much so, the concept is gaining popularity in the ecommerce space. Subscriptions have begun to spread to other industries from food, to beauty. Brands are allowing their customers to select from beverage, clothing, cosmetics, skincare, and even pet products to recieve on a monthly or weekly timeline at a recurring fee. When managed correctly, ecommerce subscriptions can be a powerful driver of growth for your business.
The ease and convenience of shopping online means that consumers trend toward hassle-free, seamless shopping experiences. Things like free shipping, free delivery, and product subscriptions help provide value to the customers with low effort and major growth opportunities for your business. Your customers benefit from having their needs met with convenience, and your business benefits from consistent retention and revenue. This also helps your business build stronger customer relationships. Your customers see the value in your products and become loyal advocates for your brand.
What is an eCommerce subscription service?
Subscription ecommerce gives consumers the flexibility to enjoy the products they need and love, and gives merchants the business sustainability they desire. Having a subscription model in your business helps you grow in loyalty while keeping your acquisition costs low. With an ecommerce subscription service, your business provides ongoing products and services on a regular basis in exchange for regular, recurring payments from the customer.
Subscriptions allow customers to make the decision to sign up, choose their products or service, and then receive their goods on a patterned timeline so they don’t have to think about it again. Consumers no longer need to interrupt their schedules for store runs when they are out of things, or popping to the store at the last minute. With subscriptions, they get what they need even before they remember they need it, all delivered to their doorstep. It’s the best example of “set it and forget it”. Which is why subscription models are gaining popularity – and fast. Subscriptions remove the hassle and headache of shopping.
Types of subscription models
There are several variations of a subscription model that your business can adopt and incorporate into your ecommerce business. It all depends on your product catalogue or service offerings. Some of the most popular subscription models include:
Replenishment Subscription: Products or services are replenished as recurring deliveries and shipments on consumable products to customers.
Service Subscription: Users can subscribe to a service they need on a regular basis and only pay for the value-based tier of their choosing for a service. This plan offers flexible pricing plans, and additional upgraded benefits to add more value to the consumer’s plan.
Curation Subscription: Products or services are provided as collections based on the individual’s unique needs, or interests. Customers can subscribe to receive curated products relevant to their preferences.
Access Subscription: Customers purchase a pass or membership to gain access to consumable services or access to the brand’s product.
Digital Content Subscription: Users pay for access to exclusive online content and benefits, which increases their loyalty towards a brand.
The benefits of running an eCommerce subscription service
The key to a budding ecommerce subscription model is customer retention and customer lifetime value (LTV). Ecommerce subscriptions help brands increase repeat purchases since you don’t have to win new business through ad hoc campaigns and promotion every month. If you have a loyal, subscribed customer base, you can rely on consistent revenue flow.
Higher customer retention means better business stability by having loyal customers. Customers subscribe to products or services knowing that they’ll continue to receive more value as time goes on. This makes it easier to retain your customers over time. With a consistent customer base you can increase your revenue by upselling or cross-selling relevant products.
Increased Customer Engagement
Having your customers subscribe to your ongoing products and services gives you many opportunities to engage with them throughout their subscription period. Through emails, SMS, direct mail, or direct phone call, you can engage with consumers for feedback, upsell, audience research, loyalty, and even subscription extensions.
When you know your number of subscribers, it is easier to predict your total turnover, as well as projection for revenue and profit. Your churn rate, rate of customer acquisition, and the cost of finding new customers are important metrics when you run a subscription business. Ultimately, it will help you focus on acquiring new customers rather than getting busy managing the inventory and payments. Because you’ll be expending fewer resources on acquisition and retention overall, you’ll have more resources on hand to invest in growing your inventory, personnel, or any area of your business overall.
No matter your business or offering, you can adopt a subscription business model that will help you increase your customer base, customer satisfaction, loyalty and of course, your revenue. Subscription models just make sense for ecommerce brands. If you’re ready to incorporate a subscription model to your business, the first step is to identify the type of business you have, curate products based on your best sellers, or customer interests, and find the right tool to manage your program. You can create a subscription commerce business with almost any product or service. However, it’s important that you price your subscription plan well in order to sustainably grow your business.
If you’re starting from scratch, you may consider investing in dedicated support from the Idealgrowth team to establish your online presence and get your subscription business model moving and thriving.