4 minute read
Subscription ecommerce business has accelerated over the past decade, continuing at 71% compound annual growth rate (CAGR) by 2028. Proof of its popularity: 78% of adults worldwide currently have subscription services.
Subscription-based businesses have popped up to serve audiences across many industries. Coffee connoisseurs can have their favorite Kicking Horse Coffee delivered to their doorsteps every month. Pet lovers can upgrade monthly Woof Pack with recurring pet food, supplements and seasonal supplies.
Sustainable subscription boxes—like the Detox Box or upGreen—cater to eco-conscious consumers who recycle or reuse plastic or create their own eco-friendly products. And for consumers who want pre-prepared healthy dinners, HelloFresh, Cookit and WeCook design meal kits for every diet, from vegan to paleo.
78 percent of adults worldwide have subscription services.
What is subscription ecommerce (subcom)?
In its simplest form, customers sign up (or subscribe) for ongoing access to services or recurring product deliveries. When your customers subscribe, they pay a recurring fee (sometimes upfront) on a monthly, quarterly or annual basis. And these recurring payments continue until your customer cancels their subscription.
expected value of subscription ecommerce market by 2028
Many businesses find value and success when building a subscription service instead of relying on one-time purchases. Research from Intuit found that subscription models are 217% more profitable for businesses than a one-time payment. That’s because subscriptions provide a predictable, recurring revenue stream for your business, along with convenient, personalized services for your customers.
In fact, subscription ecommerce (also called subcom for short) has attracted notable consumer brands, too.
- P&G’s Gillette on Demand delivers essential products like razors and soap on a recurring basis.
- Apple One is a digital membership that bundles together Apple Music, Apple TV+, Apple Arcade, iCloud+, Apple News+ and Apple Fitness+.
- Lush provides an assortment of new bath and beauty products four times per year.
Subscription ecommerce is good for business
Subscriptions come with many benefits to businesses. They allow you to:
- Create more predictable, recurring revenue. Monthly, quarterly or annual subscription plans mean ongoing, predictable revenue streams that help you grow your business.
- Boost loyalty and strengthen customer relationships. Offer a convenient, personalized experience that helps you build a strong, loyal customer base.
- Gain valuable insights. Analyze buying behaviors and customer data to refine your offerings, create personalized recommendations and make informed business decisions.
- Better predict inventory. Plan inventory, determine packaging needs in advance and prepare for dips and spikes with recurring billing.
- Save on shipping costs. Plan ahead and take advantage of lower shipping rates by sending packages early, as long as they arrive when expected.
Four ways to deliver
Depending on your audience, product, industry or service, you’ll find a subscription-based business model that’s right for you. Here are four common subscription services to choose from.
- Box subscriptions
Box subscriptions include curated items like clothing, makeup, accessories or meal kits. Customers may not know what they’re getting—so surprising and delighting them is part of the experience. Food, clothing, beauty and pet products are among the most popular subscription boxes.
- Birchbox curates a personalized box of makeup and skincare products.
- HelloFresh delivers pre-measured and pre-sliced ingredients and personalized recipes selected by a chef.
- Stitch Fix delivers outfits hand-picked by a personal stylist.
- BarkBox offers monthly subscription boxes filled with personalized pet treats, toys and accessories. Customers can add additional products and upgrades.
- Replenishment subscriptions
Replenishment subscriptions are recurring orders of essential goods like cleaning supplies, pet supplies, office supplies, beauty products or groceries. And customers are usually charged when the products ship.
- Amazon Subscribe & Save lets customers preorder items at a lower cost.
- Dollar Shave Club delivers razors, shaving cream and skincare products for men and offers upsells.
- Chewy’s Autoship sends recurring pet food, prescription refills and more.
- Access subscriptions
Access subscriptions allow customers to pay for access to premium content or online streaming-media services.
- Amazon Prime delivers access to premium services, such as free shipping, faster delivery, free online streaming-media services, exclusive discounts and more.
- Netflix provides access to its online streaming-media services.
- Spotify gives users access to online music, podcasts and video streaming.
- The National Post is one of many publications that offer paid subscriptions to their premium multimedia news content.
- Software subscriptions
Software subscriptions include online meeting solutions, dating apps, website services and more. Customers subscribe to this software as a service (SaaS) solution on a weekly, monthly, quarterly or annual basis.
- Google Meet is a self-service live-streaming platform that allows users to upgrade to premium services that include longer meetings or more perks, such as cloud storage, international dial-in numbers, recorded meetings and more.
- Opentext is a self-service, cloud-based web hosting and design platform that offers users different plans based on their website size and needs. Customers have opportunities to upgrade to additional services, including web hosting, SEO, email marketing and more.
- Salesforce offers a pay-as-you-go cloud-hosted customer relationship management (CRM) platform.
Grow your business with subscriptions
Whichever service you choose, subscriptions can help you increase revenue, strengthen customer relationships and grow your business. Take the next step and set up your subscription business—including memberships, repeat services and more—with recurring payments that build long-term relationships with your customers.
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