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Even if you've never considered a subscription, it's got potential to be a major needle mover for your eCommerce brand.
Subscriptions aren’t just for a magazine or your favourite streaming services. In today’s eCommerce age, subscriptions can be for everything from cleaning supplies to entire wardrobes. With the subscription eCommerce market seeing 66% year on year growth, not only are consumers embracing subscriptions with open arms, but eCommerce businesses are scrambling to find ways that they can get a piece of the pie too.
September 2024 saw both All Saints and Moss Bros, two major players in the fashion retail space, introduce subscription offerings. With this in mind, we wanted to look at what the benefits of a subscription offering are, and, if it’s relevant to your business, how you can set one up.
But firstly, with all this buzz around subscriptions, it’s worth asking - “what value does a subscription actually bring to my eCommerce business?”
One of the biggest pain points that eCommerce brands are constantly trying to overcome is one off customers not becoming repeat customers. It’s why they invest so heavily in loyalty programs, post purchase email flows, and so on.
Businesses that primarily run on a subscription model don’t have this problem to nearly the same degree, as the whole concept of a subscription model hinges on recurring revenue, and therefore customer retention.
A subscription model makes it easier to forecast customer demand. Whilst we may see peaks and troughs in the amount of subscribers we have throughout the year, there’s still a more predictable demand pattern with a subscription model than without.
Even subscription-based businesses with higher subscriber churn rates have those reliable recurring payments coming in. Based on previous data, subscription-based businesses can more accurately predict their cash flow, and make tactical business decisions as a result.
If a customer has signed up to a subscription service, that’s a longer term commitment than a one off purchase. So it’s an indicator that a subscription customer is more loyal than one who simply buys once and never again. Therefore, brands will usually lean into this further, by offering unique perks to their more loyal customers.
So now that you’re sold on the benefits of a subscription service, how do you know if integrating one is right for you? Well, firstly think what kind of subscription you can offer?
For the most part, all eCommerce subscriptions can be placed into one of the following four categories.
When a customer receives regular installments of a certain consumable product, this is referred to as a replenishment subscription. Replenishment subscriptions are tailored for consumable products such as food or cleaning supplies - products that are going to be used up in between one subscription and the next. The value proposition of replenishments is that customers never run out of essential items or have to reorder them manually on a regular basis.
A curation Subscription or “surprise subscription” is a type of subscription wherein the customer doesn’t explicitly know what products they are receiving. Customers subscribe to receive a box, package, or collection of items based on their preferences while benefiting from a tastemaker’s expertise. In this case, the subscription can be considered part of the product itself. As the surprise element entices customers just as much as your actual product offering.
This is the most common form of subscription. A gym membership or Netflix subscription can both be considered an access subscription, as can the aforementioned All Saints Rental and Moss Bros Subscriptions. Access subscriptions let a consumer engage with a service - both physical or digital - for a set period of time until they pay again.
A hybrid subscription combines multiple aspects of different types of subscriptions together. For example, let’s say you run a “Surprise Wine” business. In this case your subscription offering is both a replenishment and curation subscription simultaneously. As a customer is getting regular replenishments of wine, but they don’t know specifically what wine they’ll be receiving. This is just one example, as hybrid subscriptions can take many different forms.
So, if you’re thinking about whether or not you can offer a subscription service, you need to consider whether your business can fall into one of these categories.
When it comes to actually integrating your own subscription service, firstly you’re going to need the right technology.
Most eCommerce platforms do offer their own subscription integration, such as Shopify with the creatively named “Shopify Subscriptions”. However, there is also a large number of third party integrations to choose from, each with their own list of pros and cons.
Some of the most commonly-used subscription integrations are Loop, Recharge, Bold, Seal, and Appstle, but there are many more, each at a different price point. We won’t get into the specifics of each, but the main things you’re going to have to think about when choosing a subscription platform are…
With all of this taken into account, most in the eCommerce sphere are in agreement that Recharge and Loop are two great choices due to their ease of use, ability to prevent subscription turnover, and their integrations with other aspects of your business. But, take your time to look into each option and decide which is right for you.
The nature of a subscription service gives you a ton of room to play around with how you market your “product.” Whether it be the surprise nature, a tiered pricing incentive, or additional perks, there’s tons of room to discuss the unique benefits of your subscription offering, and getting people to sign up.
Whether it be 50%, 75%, or even 100% off for the first month, there’s no better way to market your subscription than letting a customer try it for a significantly reduced price.
If your customer churn rate is 60% within three months, offering an upfront payment option for 70% of the total three-month cost can be a simple strategy to boost your brand's revenue. And a good subscription integration will have these kinds of strategies in place.
Whilst a subscription model can offer significant benefits to an eCommerce business, including predictable revenue and higher customer loyalty, acquiring new customers and constantly finding new ways to develop value can pose a challenge.
One thing to note is that the major brands adding subscription services already have a huge customer base to market themselves to. If your product offering doesn’t naturally fall into a subscription offering, implementing a loyalty program, if you haven’t already, may be a better route.
But if it is a natural fit and you’re looking to add a subscription offering into your eCommerce business, contact us to see how we can help.
