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The Sale that Keeps on Giving: Ecommerce Subscription Services

10/24/2019

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Who doesn’t remember the first purchase made from your ecommerce business? It was likely a high point, and not to be forgotten. No matter how many subsequent transactions you’ve processed, you’re always hoping for a way to hook in a stream of consistent repeaters. Right?
So here’s a way: set up a subscription service.

Increasingly, larger e-tailers have gone to a model that arranges automatic shipments of products commonly replenish, such as shampoo, vitamins, and food. The ability to build this into an ordering system is extraordinary; it mirrors the way non-profits solicit a reliable stream of donations by the month or quarter. Dropping the price at a level you choose offers incentive for dedicated shoppers, and may be a great offset to the fairly good potential of repeat business.

The big players in subscription services tend to be niche products. Home delivery entities such as Blue Apron, Dollar Shave Club, and Itsy are singularly focused on a single product line. But there is no reason it can’t apply to particular products in a larger inventory.
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Aside from replenishment, the curation model is another way to land future business. Delivering a curated collection of items, usually within a specific product category, forms a perma-relationship by offering discounts on collection items that endure and increase as the customer stays on board.
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These all sound tempting, especially as a way to garner loyalty. But are they feasible? Start with an understanding of which type or demographic of consumers use them. A recent study shows that the younger, wealthier among us are more keen on subscriptions. It makes sense; they can absorb the surprise of an auto-delivery deduction from their bank account or credit card.

There are ways to ease the pain of remorseful purchases, or short-term financial crunches. Sending out reminder emails of an upcoming shipment is one. Liberal policies allowing shoppers to choose the frequency of delivery is another.

Consider these stats when you ponder whether the subscription model is worth a try:
  • Approximately 15 percent of online shoppers have taken part in a subscription program within the past year.
  • More than half of all ecommerce subscribers retain more than a single active subscription.
  • Revenues for these larger subscription services topped $2.5 billion in 2018.
 
While the traditional subscription model is dedicated to a single product line, increasingly Amazon and other shopping portals provide a subscription option. Don’t be intimidated by that example; although you are far from reaching monumental growth and the status of a giant, there will be a progression of sub-models designed solely for the smaller seller.

The first order of business is to choose a platform that fits with your size, product category, and objective. It’s imperative to find one that allows customization, but is affordable and user-friendly. For a good start, see a list here.
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Once this trendy subscription model takes hold, it may become old news for consumers, and a go-to method for them to save time through automatic re-ordering. Saying you were in early with your version might just be a point of pride.
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