The ecommerce subscription model has been around for a long time. It’s recently gained popularity again as more and more people are looking for ways to save money. There is an expectation that this ecommerce market trend will continue in the coming years, with many businesses jumping on board.
In this article, I'll discuss some of the benefits of using the ecommerce subscription business model and how it can help your online store succeed.
What Is An Ecommerce Subscription Model?
An ecommerce subscription model is a business model in which consumers pay for regular deliveries of products or services. This service usually comes on a regular basis in the format of a subscription box.
Subscription models have been around at least since the printing press was invented when customers would subscribe to periodicals and novels that were released in installments. More recently, cable TV was one of the most popular subscription models for decades.
Now, ecommerce has taken over the subscription model platform and implemented it in new ways.
How An Ecommerce Subscription Model Works
In an ecommerce subscription, companies establish an ongoing contract with customers, delivering the same product or providing the same service on a regular basis. Customers then receive a recurring billing for the product or service.
Ecommerce business models have been around for years but recently gained popularity again, as more consumers are seeking ways to save money in an uncertain economy. Many ecommerce companies that deliver products offer small discounts on retail prices, which allows consumers to save money while providing companies with long-term revenue streams.
Why Ecommerce Subscription Models Are Trending
There are a few reasons why ecommerce subscription models have become social trends. Many people find this model attractive because they no longer need to worry about running out of products and having to purchase more items at full price.
As digital technology improves every year, ecommerce grows alongside it. The practicality of subscriptions, combined with the accessibility of websites and mobile apps, makes ecommerce subscriptions a desirable model for both business owners and consumers.
The COVID-19 pandemic boosted the popularity of the subscription model. With an ecommerce subscription, consumers were able to socially distance by subscribing to their regularly used products and services. This allowed consumers to avoid public spaces and exposure to the virus, and it increased business for many ecommerce brands.
Advantages of an Ecommerce Subscription Model
The advantages of a subscription box business are numerous, and more brands are adopting this kind of platform every year.
One of the most important benefits is that it gives ecommerce brands increased retention. Subscribing customers become familiar and comfortable with ecommerce brands the longer they’re subscribed, allowing businesses to develop long-lasting relationships with them.
Another advantage is that a subscription-based business allows you to plan for the future to ensure you are always stocked and have products on hand.
Because of the convenience, customer retention is much higher with a subscription-based business. This is important for businesses that are trying to build customer relationships with their customers and ensure that they’re getting the most customer lifetime value possible from each sale.
Lastly, it is a great option for customers to try different services without committing to one particular product or service. Considering the popularity of ecommerce subscriptions among consumers, it makes sense to adopt a subscription platform for your business.
Ecommerce subscriptions help your bottom line
There are many ways that subscription ecommerce platforms can benefit your business. In addition to increased retention and improved forecasting, subscription platforms allow you to engage with your customers regularly and frequently. If a customer is subscribed to your service, you can easily upsell new services to them, which they’ll be more inclined to pay for since they trust your brand.
Ecommerce subscriptions allow you to provide long-term recurring revenue streams. Because customer retention rates are higher with subscription commerce, it’s an excellent way for businesses to grow their bottom line.
In order to make this type of revenue model, you need to figure out your subscription billing. Ecommerce businesses have to make sure that they’re billing their customers for every item and service provided. This is an important task because if you don’t properly calculate the cost of your subscription services, you could end up losing money instead of making a profit!
Recurring billing and high subscription numbers are what keep subscription commerce companies afloat.
One example is Amazon’s Subscribe & Save program, which allows people to sign up for regular shipments of household items such as toilet paper or pet food for a 15% discount.
Ecommerce subscriptions are a great way for online stores to offer convenience and variety while delivering long-term customers and revenue streams.
Ecommerce subscriptions create recurring revenue
When you have an ecommerce subscription, you bill the customer for each item or service provided to them. Subscription billing is helpful for customers who have the ability to choose how many products they’re purchasing. If they have the ability to choose their delivery, they can decide how much they want to pay.
Ecommerce subscriptions allow your company to capitalize on recurring billing and, therefore, a recurring revenue model. Depending on your service and what your business needs, you can offer subscriptions annually, monthly, bimonthly, weekly, or at whatever interval you choose. You can set up a subscription management solution to track and collect recurring payments every month, week, or year.
The ability to estimate future revenue based on current subscriptions offers more accurate insight into your business’s metrics.
Ecommerce subscriptions create a loyal customer base
When you set up ecommerce subscriptions on an ecommerce site, customers must provide their credit card information and complete the subscription. Once you do this, they have committed to that specific ecommerce site for a certain number of months or years. This gives them time to try out new products before deciding if it’s something that would work for them.
Ecommerce subscriptions also foster customer loyalty by showing their customers that their offerings are high quality. This can be done by showing where your products are sourced from, only using organic ingredients, and implementing clever marketing.
Marketing plays an important role in customer loyalty. Ecommerce subscription businesses should aim to create a lifestyle brand customers can trust. You can do this with carefully curated content on the site, which engages and gains customer loyalty.
It’s important that ecommerce subscription options have clear and easy instructions on how to cancel the service if customers don’t want it anymore. Subscription billing can be expensive for those with a tight budget. Therefore, ecommerce subscription businesses need to find ways for people of different financial statuses to be able to afford their services.
There are ways to work around this, such as offering ecommerce subscription plans targeted at people with more money. Alternatively, you can have an ecommerce business exclusively targeting low-income families who cannot afford typical ecommerce products.
Types of Subscription Models
There are several kinds of successful subscription models, and they can all adapt to different industries in unique ways.
Access subscriptions charge customers for a membership that allows them to buy the brand’s service or product. Curation subscription services personalize their service or product for each individual customer.
The auto-ship subscription model, also called the replenishment model, is an ecommerce business model where a customer subscribes to receive regular deliveries of the same type of product.
An example of a successful company using this model is Dollar Shave Club. It offers ecommerce subscription services for razor blades and other shaving products. Other examples of common auto-ship subscription products include household products, groceries, and makeup.
Curated box subscription
A curated box subscription is an ecommerce subscription service that offers boxes of items to its customers. An example is Birchbox, which offers a box full of beauty products every month for just 13 dollars. This is a great subscription model because customers are able to try out new products and brands without having to commit.
Most people are members of an access subscription model. These are ecommerce subscriptions in which someone pays a monthly or yearly fee for access to ecommerce subscription services. This gives them the ability to choose which ecommerce products they want whenever they want them.
For example, Netflix offers ecommerce subscription services starting at $11.99 a month, which gives you access to thousands of movies and TV shows on-demand—anytime you want them.
How to Choose the Right Subscription Model for Your Business
The ecommerce subscription model is a great way to grow your business, and almost any business can adopt a subscription model of some sort. The first step in choosing which ecommerce subscription service to adopt is deciding what type of model matches your service and what kind of brand you want to be seen as. There are plenty of online resources explaining the pros and cons of each model type, what to avoid, and best practices.
The next step is to look at your competitors and see what kind of ecommerce subscription service works best for them. If none of your competitors have adopted an ecommerce subscription yet, consider how you can stand out as the first.
If you want to be seen as an exclusive brand that offers a better customer experience than competitors, an access subscription platform would work well for you.
If your service is one that customers rely on consistently, an auto-ship subscription is best.
Curated subscriptions work well for businesses that want to create personal relationships with customers. These subscriptions are unique because they change over time. As your customer gives you more feedback, your service becomes more and more personalized to them.
When you’re ready to implement your subscription platform, you can find open-source platforms online to help you get started. These open-source platforms are designed to help ecommerce business owners create a subscription website by filling in a few fields. Some of the best open-source platform options are ecommerce subscription plug-ins, ecommerce subscription templates, and WooCommerce subscriptions.
What Are the Best Subscription Models for Different Industries?
Ecommerce subscriptions are thriving in a variety of industries because of their flexibility and benefits. These various industries include groceries, fashion, personal care, television, video games, and music, just to name a few.
Almost every business can adopt an ecommerce subscription to sell its product or service as long as it can be provided over the Internet or delivered to consumers.
Let’s look at some subscription examples of popular industries that are branching into this space.
Book and publishing industry
Let’s say you’re a book company whose goal is to give children access to age-appropriate books at an affordable cost. In that case, you’d opt for the curated subscription method.
While signing up for the subscription, parents would simply choose their child’s age group and topics they’re interested in. After that, your company will choose which books are sent based on that information. Typically, a subscription like this would be sent monthly or quarterly.
Pet food industry
If you’re a pet food provider and want to make it more convenient for your customers to have pet food on hand at home, you’d opt-in for the auto-ship subscription. This option is simple and straightforward. Customers choose which products they want and how often they want you to ship them.
Niche blogging industry
Let’s pretend you’ve come up with a great micro-niche blog idea and it’s becoming a success online. You can create an access subscription service for your website.
This does two things: One, it brings in recurring monthly revenue. Two, it makes the subscription content more alluring to readers. Have a sample of your content available to all readers to bring them to your website. Once they realize they’re missing out on more premium content, they’re more likely to sign up.
What Are The Top Subscription Platforms?
Now that you know the potential benefits of running a subscription, check out how these subscription ecommerce platforms can get you up and running quickly.
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More great ECM content:
- How Can Picking The Right Ecommerce Subscription Management Software Impact Your Business?
- How To Start A Subscription Box: A Step-By-Step Guide For Ecommerce
- 10 Best Subscription Ecommerce Platforms
- 10 Best Open Source Ecommerce Platforms
- Why An Open-Source Ecommerce Platform Is the Best Choice for Your Online Store