All You Need to Know about Subscriptions
Do you remember the days when subscriptions were limited to newspaper delivery and gym memberships? There's a subscription to suit every occasion today. You could actually fill your whole day with subscriptions, even if you didn't want to. You can have the coffee, clothes, makeup, software, meals, drinks, and shows delivered to you on a regular basis.
The subscription ecommercemarket has seen incredible growth, from SaaS companies to subscription box manufacturers.
ReCharge's most recent State of Subscription Commerce Report revealed that there were more subscription shops than ever, with 90% year-overyear growth in subscribers.
Subscriptions allow for repeat sales and turn one-time purchases into repeat business. Transactions become relationships. Your business can get to know the most loyal customers and tailor your offerings to them. Subscriptions offer both merchants and customers huge benefits, including delivery skips, product exchanges, cross-sells and upsells.
You might consider offering subscriptions to your brand. Let's explore the world of repeat sales and discover how you can reach your subscribers wherever they are with this offering.
What is an Ecommerce Subscription Service (Ecommerce Subscription Service)?
In exchange for a higher lifetime value (LTV), and lower churn, brands are exploring offering recurring options to customers. Subscriptions are a better option than traditional one-off purchases, which meant less customer relationships and more work for return customers.
What is an ecommerce subscriber? A subscription service is when companies receive recurring payments for products and services that they offer on a regular basis. These products and services can be sold online as ecommerce subscriptions.
Many product categories can be included in subscription services, including the most sought-after (i.e. Subscription services can include food and beverage subscription boxes, as well as novelty items such hobby boxes, and everything in between.
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Subscribe to Ecommerce: Three Types
Ecommerce subscriptions generally fall into one of three categories: replenishment subscriptions, curation subscriptions (aka "subscribe-and-save") and access subscriptions. Let's have a closer look at each one to see the differences in product focus and their benefits for customers and merchants.
1. Subscriptions for replenishment.
Refillment subscriptions account for 32% of all subscription markets. These subscriptions include products that are regularly used. Consider deodorants, laundry detergents, and protein shakes. Dollar Shave Club is an excellent example. Subscription boxes offer customers regular deliveries, so they can get their favorite products as soon as they run out. These subscriptions are also known as "subscribe and save" (think Amazon's option). Customers who choose to receive the product on a more regular basis often get discounts.
2. Subscribe to Curation
Curation subscriptions are the most popular type of subscription, with 55% of subscribers. They were the first subscriptions to be launched in the recurring subscription market, and have only grown in popularity in the past decade. Curation subscriptions focus on boxes of carefully selected products that are delivered directly to customers. You can have different product types in a box or stick to one theme such as skincare products or meal kits. Blue Apron and Birchbox are two examples of popular subscriptions.
3. Subscribe to our newsletter.
Access can be used to provide membership, access to content, or discounts, such as streaming services like Netflix. Merchants are increasingly attracted to access subscription services because of the increasing popularity of things like community growth and connected hardware.
Subscription Service Benefits
Let's now look at the different subscriptions that you can offer. Intentional subscriptions can help you increase recurring revenue, acquisition and retention, forecast accuracy, and build a community of brand advocates.
1. Acquire more.
New customers are entering the subscription market at an unprecedented rate, according to research. ReCharge's most recent State of Subscription Commerce report found that physical subscriptions saw an average of 90% growth from 2019 to 2020. Ecommerce subscriptions are attractive because of their inherent value. They offer many benefits, such as financial incentives, convenience, novelty, or entertainment.
Ecommerce subscriptions offer unique opportunities to increase customer acquisitions due to their ability to build customer relationships and the recurring nature their offerings. Subscribers with strong communities can use positive reviews, engagement on Social Media and even influencer Content to reach new customers and encourage them to sign up. These companies can track the behavior of their subscribers over time using analytics and market research to help them target potential customers more effectively.
2. 2. Increase retention
Lifetime value increased with subscriber growth in 2020. According to the State of Subscription Commerce report, LTV average growth was 11% in 2020. This means that subscription customers spend more on their service than they did before cancelling.
Customization is a major way for online shops to improve loyalty and retention. A McKinsey survey found that 28% of subscribers to curation and access said personalization was the main reason they stay with their subscriptions. This could include customization of product options (such swapping one product or adding one-time add-on purchases to a subscription), to communication preferences (such enabling SMS notifications) and frequency of purchases (such giving options for different delivery frequencies or allowing customers to skip deliveries). Giving subscribers the ability to customize their subscription to suit their needs increases trust and helps to keep them around longer.
3. Forecasting made easier
Subscription payments offer huge benefits for both customers and merchants. The subscription model creates predictable revenue streams through vaulted payment information, scheduled orders, and other aspects. This can make forecasting simpler and more accurate. It also benefits other aspects of the business, such as inventory management and supply chain management.
Subscriptions can be a useful tool to track product performance and customer behaviour over time. Subscription brands can improve their effectiveness by being more intentional with their data and analytics.
4. Create a stronger brand community
Subscription businesses have the unique ability to build strong brand communities due to their ability track customer behavior, product performance over time, and the variety of touchpoints they offer. Subscriptions can bring many benefits that will help grow the business. Brands can draw new customers by engaging with their community through positive reviews and social media engagement. These interactions not only increase brand loyalty and lifetime value but also provide valuable feedback loops that can be used to improve subscription product offerings. Brands that interact with their community on social media send a message to customers that they are available and capable of providing a great customer service experience.
Potential Challenges in Creating an Ecommerce Subscription Service
What are the challenges of operating an ecommerce subscription business? for many businesses, the biggest problem is moving away from a transactional business model and towards a relational commerce model. You can offer an ecommerce subscription to help you restructure your business processes in order to accommodate this shift.
1. Moving to relational commerce.
You can attract customers to your transactional online store and make a sale. Then you move on to the next customer.
Relational commerce and a subscription model allow you to focus on more than one-and-done conversions. Merchants keep subscribers by creating a community and bond around their products. This increases brand loyalty and drives repeat sales.
Strong brands that align with the values of their subscribers are more likely to retain them. This is the sweet spot. You can create a community around subscriptions and engage customers.
2. There is no differentiation between subscription services.
Your subscription plan is a great way to encourage future customers to sign up. What makes you different from other subscription providers? These are the most important things subscription merchants must consider if they want to be successful.
Diversification and differentiation are crucial to stand out in a saturated marketplace. You can be smaller, or start-up, and still innovate. Merchants who succeed are able use their data to understand customers and create a plan of attack to meet them where they are.
Tips to Running the Best Ecommerce Subscription Service
Whatever your industry, no matter what your focus, there are a few key themes that will help you set up your ecommerce subscription services for success. Bottom line: Get to know customers as well as possible, keep track of your learnings and adapt your offerings to customers' needs. Your customers will be happier and more loyal if you make it as seamless as possible.
1. Keep track of KPIs and data.
While it's easy to assume your customers' spending habits and spend habits, if you don't have data backing up your assumptions, you will be stumbling in the dark. A subscription ecommerce platform that is successful will often thrive by properly tracking the data. You should consider customer churn rates, customer acquisition costs (CAC), average purchase value (AOV), customer lifetime value (LTV), and average customer value (ADV).
Subscriptions are a great way for merchants to gather data about customers. This can be used to provide more personalized services, such as recommendations, offers, or discounts.
2. You must ensure that you are using the correct ecommerce platform.
BigCommerce. Shopify. Woocommerce Subscribes. Subbly. Subbly.
Do you want to offer a basic monthly subscription box service? Do you need a niche-specific headless build? Are you interested in creating an omnichannel model where customers get the same brand experience regardless of whether they purchase from your website, on social media, or in a brick and mortar store? How will you price your products? Which payment gateways will your company use? What are your transaction fees from an ecommerce platform How does subscription management look?
These are crucial questions to ask when you're running a subscription-based company. It is important to choose the right ecommerce platform for your needs. BigCommerce, for example, is a great platform for merchants looking to offer an omnichannel model. The four pillars that make BigCommerce omnichannel successful (sales channels and marketing and advertising, operations, fulfillment, and marketing) will allow you to reach your customers wherever they are.
Before you commit to an ecommerce subscription, do your research and choose the one that suits your needs.
3. Incentivize autopayments, auto renewals.
Because of their predictive nature, subscriptions are great for businesses. Merchants and subscribers both benefit from repeat orders being as easy as possible. Customers can also place repeat orders directly on your site, which increases engagement and SEO.
Incentivizing autopayments for subscriptions gives customers convenience and helps businesses forecast future revenue. Subscription products and autopayments can be incentivized with discounts, bundle deals or other incentives.
However, auto renewals can be a valuable retention strategy. It is very difficult to lose a loyal customer due to expired credit cards or forgetting to renew subscription products.
Your business will be able to save money by informing customers about the different payment options available and incentivizing subscription plans with auto renewals. Smart businesses know to inform customers before their subscription renewals. You want to retain customers in your subscription program, maintain a positive brand affinity and avoid customer support headaches by notifying your customers before any charges are applied to their accounts.
Notification emails should include options to swap or skip delivery. Data shows that subscribers who opt to skip or swap deliveries stay with us for twice the amount of time than those who are not engaged.
4. It is important to ensure that subscriptions are in line with your business goals.
Ecommerce subscriptions are gaining popularity at an alarming rate. However, starting a subscription company is not a guarantee of success.
Your business goals should be aligned with your subscription offerings. Are you willing to invest the time and resources necessary for your subscription company to succeed? Are your products well-suited for subscriptions or too niche to be ordered on an ongoing basis?
Subscription platforms can generate revenue when managed well and provided with the right resources. Make sure your business provides the right services to ensure that the machine runs smoothly.
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