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We are here to break the social taboos and to say that there is no shame in paying the gym subscription and not going to the gym!
At least we took the first step, which is subscribing, and for sure, the next step is gonna follow, right?
Nowadays, and specifically ever since the emergence of COVID-19, the subscription model started to extend to the e-commerce landscape. It became noticeable that customers started to subscribe to different businesses.
The magnificence of subscription commerce is that it combines convenience and customization. It provides customers with selected products delivered to their doorstep regularly each month. What else do they need?
Such a model is witnessing a boom and is grabbing customers' attention and money too.
Therefore, we will take you through a full guide on subscription commerce. We will cover what it is, how it works, its benefits, and examples.
Stay ahead of the game and keep on reading what we have next.
What Is Subscription Commerce?
Subscription commerce is a business model in which customers subscribe to receive a specific product or service regularly in return for recurring fees.
The product or service is sold monthly, quarterly, or annually. It’s all based on the customer’s choice.
This type of business model is perfect when it comes to products that need to be continuously restocked. Hence, customers don’t have to worry about restocking, as products will be shipped at an agreed-upon time.
Types Of Subscription Commerce
There are different types of subscription commerce. They are all adopted by different businesses based on the type of service or products offered. So, let’s dig more into each type.
1- Access Subscription Model
- In this model, subscribers pay to receive exclusive products, content, or discounts. Hence, they have the choice to choose the product or service they want whenever they want.
- For example, streaming services like Netflix are an example of this type, in addition to Rent The Runway (we will discuss it later).
2- Replenishment Subscription Model
- As for this model, the customer subscribes to receive the same product regularly. They don’t want to risk going out of stock. In addition, customers are seeking a discounted rate for their subscription.
- We couldn't find a better example than Dollar Shave Club
3- Curation Subscription Model
- This model relies heavily on personalization. The business gathers different products and delivers them to customers at regular times. Hence, customers don’t know the products they will receive.
- However, when setting up their accounts, the business will gather their preferences to deliver relevant products.
- For example, BirchBox, which we will discuss later.
Benefits Of Subscription Commerce
Want to know the benefits of subscription commerce, or in other words, why customers and businesses love it? Let’s break it down to know more about it.
1- Better Value For Money
As customers subscribe to this business model, they express their commitment to receiving products regularly. Accordingly, such commitment means they will have better prices compared to regular customers.
In other words, their orders will be discounted due to their subscription. As a result, they receive a better value for their money. We have got to say that with the current economic conditions, everyone wants better value for money.
Therefore, your primary focus in your subscription commerce is to offer competitive prices that customers will never want to miss.
2- More Easy And Convenient
One of the primary benefits of subscription commerce is its ease and convenience. Shoppers won’t need to look for products, do research, place an order, add their payment tool, and wait for the courier’s continuous calls for the address.
With subscription commerce, customers won’t have to exert any effort when placing an order. Only when they set up their account the first time and then everything will work smoothly and orders will be delivered regularly just as they demand.
Hence, no risk of forgetting to restock while having a convenient shopping experience.
3- Builds Customer Loyalty
It’s very difficult to build a strong relationship with customers who pass by your online store every once in a while.
In contrast, regular shoppers are the ones you can focus on to build a solid base of loyal customers. We know regular shoppers can be difficult to acquire but it’s not anymore.
In subscription commerce, you already have a base of regular customers interested in your products or services. Hence, you can direct your attention to these shoppers to ensure their satisfaction and engagement and build customer loyalty.
4- Consistent Revenue
One of this model's main advantages is that it provides predictable and consistent revenue for businesses.
This allows them to accurately forecast the amount of money incoming to create better planning. In return, it enables businesses to invest in growth, research, and development.
5- Better Customer Retention
Customer retention indicates the number of customers you were able to sustain over a certain period. By establishing a strong base of loyal customers, you will be able to increase customer retention too.
Generally, subscription commerce tends to have better customer retention than other businesses. This can be linked to the idea that when customers subscribe, they stick around with your business for a longer time.
6- Increased Customer Lifetime Value (CLTV)
Customer lifetime value (CLTV) is the amount of revenue expected to be generated from a single customer throughout their business relationship. It’s worth mentioning that CLTV is one of the key metrics used in e-commerce to measure performance.
It goes without saying that subscription commerce contributes to higher CLTV. The recurring revenues generated from customers while ensuring continuous purchases will lead to increasing CLTV.
Statistics On Subscription Commerce
Let’s shed light on some statistics on subscription commerce and its accelerating performance.
- According to The Business Research Company (2024), the subscription commerce market is expected to grow from $199.41 billion in 2023 to $330.58 billion in 2024 with a compound annual growth rate (CAGR) of 65.8%.
- Also, in 2028, the market will witness a CAGR of 61.1% and reach $2227 billion.
- According to a study by Statista (2024), the leading subscription service worldwide is groceries with 41% of global subscribers registered regularly to receive their food.
- Amazon’s subscription model, Amazon Prime, has around 200 million global subscribers (EarthWeb,2023).
- Sticky.io (2023) stipulated that 81% of subscribers mentioned that convenience was the most important dimension to encourage them to enroll in a subscription model.
- In 2020, the sales generated by subscription commerce reached $23 billion in the US.
Examples Of Subscription Commerce
1- Dollar Shave Club
Did anyone mention subscription commerce? Well, we can’t discuss this business model without mentioning Dollar Shave Club, the tycoon of subscription commerce.
Dollar Shave Club delivers quality razors every month to their subscribers at a discounted rate. Their target audience is customers who want to save money and time on buying razors. Hence, it provides customers with the convenience to deliver recurring products right to their doorstep.
It offers high-quality products and tries to cross-sell by offering complementary products as well.
2- Amazon
Amazon embarked on the vast opportunities offered by subscription commerce by establishing Amazon Prime. It provides subscribers with various benefits like exclusive discounts, free and fast shipping, and streaming services.
Accordingly, customers pay a recurring amount of fees to receive these benefits. In addition, they can end their subscription at any time they need. Hence, ensuring more convenience. A study has shown that Amazon Prime has more than 200 million subscribers with more than 12.9 billion dollars in sales in 2023 (Backlinko,2023).
To raise the bar even more, Amazon created its Subscribe & Save model. With a discounted rate, your products can be automatically delivered to your doorstep based on your schedule. Thus, you will free your hands from the continuous ordering of your everyday products as the process will be automated by Amazon.
3- BirchBox
Women’s obsession with beauty products extended to subscription commerce through BirchBox.
It starts with answering a quiz to identify your preferences, goals, and suitable products. Then, customers have the chance to choose their products or they can be customized based on the quiz. Finally, the beauty box is shipped to customers.
Yes, it’s that easy.
Shoppers get the chance to try a variety of products each month based on their preferences without the burden of restocking.
Customers usually like to try product samples before placing an order. Hence, BirchBox provides them with samples while also igniting their desire to discover new products to order in the future.
4- Incapto
Incapto understands how uncomfortable you can get without your favorite coffee. Therefore, Incapto was astonishing in creating a coffee subscription commerce. So, you will never worry about coffee restocking anymore.
They aim to provide the most flexible coffee subscription as customers get the chance to change the delivery date, the quantities, and even the type of coffee, all based on their preference.
5- Society Socks
Can you tell us how many times you lost a pair of socks and still can’t find it today? Well, we believe there is a secret place underground that includes all of our mysteriously missing socks.
But anyway, Society Socks understands such a misery with socks. That’s why they created socks subscription commerce ( hold your enthusiasm here).
Yes, you guessed that right: every month, you will receive pairs of socks randomly to your home in return for recurring fees. There are various available plans as you can pay monthly or annually. However, paying annually means a higher discounted rate.
Not only that but also, for each pair of socks you receive, similar ones will be donated to those who are in need. So, you get new socks every month and donate too.
For socially conscious customers, Society Socks truly nailed it.
6- Rent The Runway
We just love how creative Rent The Runway has gone. To all fashion lovers, Rent The Runway provides you with the chance to receive monthly goodies from famous designers to rent them, keep them, or return them.
They offer different subscription plans to address all needs. In addition, the amount of money paid each month will be reflected in the number of pieces received.
Rent The Runway understands all women’s struggles and they addressed it perfectly.
Final Thoughts
The subscription commerce is skyrocketing. With its convenience, personalization, and value, it’s revolutionizing the online shopping landscape. Hence, this is your chance to embark on such a model in your e-commerce.
You can create a specific service that works with subscriptions in your online store to benefit from the recurring revenue model. And you can always check out our examples for inspiration.
When initiating your subscription service in your e-commerce, the issue might be delivering the idea the right way to your customers.
But no worries. Convertedin will handle your email marketing campaigns to raise customer awareness. Its email marketing campaigns are tailored to different activities to effortlessly increase your ROI.
If you decide to go for ads, Convertedin has your back too. Its dynamic ad automation will deliver personalized ads across different channels to maximize sales.
Not only this, but it offers auto-segmentation and a powerful product recommendation engine so you can offer customers relevant product recommendations based on their purchase history.
With Convertedin, you have a complete marketing automation tool right in your hands.
So, think no more and book your demo now!
