7 MIN READ
Are you thinking of starting a subscription service as a part of your eCommerce business? Over recent years there’s been a massive increase in popularity of subscription-based eCommerce driven by growing consumer demand. There’s a huge opportunity here for retailers – we all love a subscription service, just look at how well platforms like Netflix and Spotify are doing!
Subscription boxes and services aren’t really a new concept, with Love Film founded in 2002, where you’d receive DVDs by post. However, we’re now seeing retailers leverage the resurgence in popularity of receiving products on a regular basis direct to your door. There’s been a real uplift in what consumers are subscribing to – you can get a subscription box for pretty much anything these days! From dinner ingredients, clothing or memorabilia, to pet toys and shaving equipment – and anything in between. You name it, there’s most likely a subscription box for it.
With this exciting possibility, you may be wondering is it right for your business and how do you create a successful eCommerce subscription model?
Types of subscription boxes
Depending on your business and what you want to achieve from offering a subscription, there are a few things you’ll want to consider. With different types of eCommerce subscription box to choose from, make sure you opt for one suited to your business model.
- Replenishment: These are great for frequent or regular buyers, where they can subscribe to repeat purchase and save. Usually, these come with options on frequency, (30, 60 and 90 days typically). An example might be vitamin supplements; if a jar is of 60 tablets, and they’re one a day, offer 60-day time frame (ensuring delivery arrives before that cut off rather than after).
- Discovery: These are typically made up of curated items for your customer to try and discover new products. A good example of this is Birchbox, where subscribers receive four or five selected beauty items a month. Another example of discovery is the ever-popular Graze box, where subscribers get healthy snacks either weekly, fortnightly or monthly, comprised of different snacks they can try and rate.
- Access: This one is usually marketed as an exclusive subscription, where customers will get special access to offers and sales, free delivery or other perks. ASOS, for example, is a really popular one, where for £9.95 a year, members will get unlimited free delivery. Amazon Prime offers special discounts and free delivery to members for £7.99 a month – including TV streaming services.
You’ll also want to consider different payment structures such as fixed for the duration, like ASOS’ £9.95 a year for a premium membership. Or, do you want to take recurring payments (when the items are sent) with the consumer to have control over termination?
If you opt for taking recurring payments on a rolling basis, make sure that you’re using an eCommerce platform and payments system to support this, including what to do if a payment fails or a card has expired. Take steps to plan out how this will affect your bottom line and customer experience, and how to manage it effectively.
Benefits for retailers
So, now you’ll have a bit more of an idea whether a subscription box could work for your business, but why bother? Well, there are loads of benefits to running a successful eCommerce subscription box…
- With guaranteed repeat deliveries, there are more customer contact points along their journey with you. This means there is more opportunity to delight your loyal customers and give an excellent experience.
- You have regular transactions taking place which helps you forecast your financials and stock more efficiently.
- Regular contact also means greater brand awareness and keeps you in mind regularly, without having to factor in additional marketing spend.
- It will lower your customer acquisition costs and boost customer retention. With this, it also improves customer lifetime value for factoring into marketing and budget.
- If you can work in a social media campaign with well-designed packaging and unboxing experiences, customers will be more likely to share their experiences on social media platforms. This will raise brand awareness and the opportunity to source and use user-generated content.
Benefits for consumers
Running a successful eCommerce subscription model is a win-win for both retailer and customer. They’re so popular with consumers right now, and for good reason.
- In our fast-paced, on-demand lives, people want convenience above all else today. Why spend time sourcing and buying products when you can receive them, timed for when you need them without having to lift a finger?
- Personalised experiences are driving customer experience and sales more than ever. Subscription boxes are a great way to boost this experience for your customers, allow them to tailor boxes to suit their interests and needs. If you’re offering beauty products, you can base what they receive from their skin or hair types, for example. The need for personalisation goes deeper as people are seeking out tailored experiences in the face of what has been mass consumerism for decades. We don’t all just want the same stuff anymore, and people are willing to provide retailers with the personal details to make sure this happens with their personalised subscriptions.
- While you need to keep your subscription box interesting and engaging so customers want to keep receiving more from you, you need to be aware that with a rolling payment model, they can typically cancel when they want. This flexibility is a driver for many customers wanting to try subscription out, they’re safe in the knowledge that opting in and out is flexible. It’s a good idea to keep options for what they receive as flexible too, like Graze’s rating system, where customers can opt-out of receiving types, flavours and products that don’t suit their diets etc.
- Many of the successful eCommerce subscription box models out there are cost-effective and typically run a discounted price for the products when sending them out in a subscription box. This is a benefit to the customer as it saves them money, but also for you too – regardless of discount, you’ll know they’re likely to be buying again, and again.
- For customers receiving items on a replenishment model especially, the reduction in waiting between items is a huge bonus. They no longer have the trouble of running out of something and having to go to the shop, or order and wait for it, it can be there ready to use ahead of time without them having to remember when what they’re already using is running out.
So, is it right for you? Ask yourself these questions
Keep in mind that your business may not be cut out for a successful eCommerce subscription model – it’s not something that’s fitting for all businesses. And that’s okay, just make sure before you jump straight in, you ask yourself the following questions and really weigh up whether offering a subscription-based service is going to suit you.
1. How often do customers need to buy the things you sell?
2. If you sell high-ticket items, do you sell complementary products that people may be more interested in getting a subscription for?
3. Can you meet profit goals and expectations while offering subscriptions for a slightly discounted price?
4. What does your data say about your current shopper habits?
5. Does your eCommerce platform currently support this function?
Getting started – what to consider
You might be just starting out, or well established within your market, however, you’ll still have to overcome the difficulty in selling the commitment of investing in repeat purchases for customers, versus a one time purchase.
Do your market and competitor research before starting off. Subscribe to some of your competitors if they offer them and see how they’re doing it and managing the process. Consider how you’ll market this too, what is your USP and how will you convey this to your customer base? Target customers you already have, they’re more likely to convert to being a subscriber, especially if they’re already a regular customer.
As we noted above, keeping the items in your subscription box relevant, fresh, and personalised will help combat a loss of interest. Plan out how you will do this.
Make sure you’re using an eCommerce platform that supports subscription functionality. Are you using a platform that will not only support subscriptions and successful repeat payment processes but one that will help you scale and grow with this new exciting area of your business?
We’ve supported the introduction of successful eCommerce subscription box models for a number of our fantastic clients. If you’re looking for advice or support with this and need an eCommerce platform that supports subscriptions – get in touch, we’d love to help!
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