Subscription-based business models have been consistently rising in the last few years. Mainly, it originated as a result-oriented business model for applications and websites offering SaaS (Software as a Service) – such as Netflix, Zomato, Swiggy, and Amazon Prime. But now, multiple businesses, like fashion, beauty, fitness, etc., are adopting subscription services.
Now, you might be thinking whether your store requires this service or not. No need to fret! This blog will shed light on all the relevant aspects of eCommerce subscription services.
Subscription-Based eCommerce Model and Its Benefits
In this type of business model, a customer will be charged recurring fees on a monthly, quarterly, or yearly basis for the service or product in return. One of the best examples of a subscription-based business is Zomato Pro, wherein they offer a good amount of discounts on food orders, delivery services and dining.
Another example of such a business model is Paytm First, wherein customers are offered discount vouchers for multiple brands and other benefits. Businesses utilize eCommerce to offer a convenient and personalized way of availing products and services.
But this is just the tip of the iceberg: With subscription services, eCommerce businesses can offer a range of benefits for customers by offering them increasingly popular and convenient ways to access products and services. Here are some key advantages that customers can enjoy through subscription services:
1. Convenience
- Benefit: Customers receive products or services regularly without reordering each time.
- Example: Subscription boxes deliver curated items to the customer’s doorstep on a scheduled basis.
2. Cost Savings
- Benefit: Subscribers often receive discounts or special pricing compared to one-time purchases.
- Example: Monthly subscription plans for software or streaming services may be more cost-effective than individual purchases.
3. Time Savings
- Benefit: Customers save time by not having to repeatedly browse, select, and order products.
- Example: Subscription services for household essentials or groceries eliminate the need for regular trips to the store.
4. Discovering New Products
- Benefit: Subscribers often receive curated or personalized selections, introducing them to new and interesting items.
- Example: Beauty subscription boxes provide customers with a variety of skincare and makeup products to try.
5. Predictability and Planning
- Benefit: Customers can plan and budget more effectively with predictable, recurring charges.
- Example: Subscription services for utilities or streaming platforms provide a consistent monthly fee.
6. Tailored Experiences
- Benefit: Subscription services can offer personalized recommendations based on customer preferences.
- Example: Music streaming services create personalized playlists and recommendations for subscribers.
7. Exclusive Access and Perks
- Benefit: Subscribers often gain access to exclusive content, early releases, or special promotions.
- Example: VIP subscription tiers for e-commerce platforms may offer exclusive discounts or early access to sales.
8. Continuous Availability
- Benefit: Essential products are consistently available, reducing the risk of running out.
- Example: Subscription services for pet supplies ensure a regular supply of food and accessories.
9. Flexibility and Customization
- Benefit: Many subscription services allow customers to tailor their subscriptions to their needs.
- Example: Meal kit subscriptions often allow users to choose their preferred recipes and serving sizes.
10. Reduced Decision Fatigue
- Benefit: Customers avoid decision fatigue by receiving pre-selected items based on their preferences.
- Example: Clothing subscription services send curated fashion items without customers having to browse extensively.
11. Loyalty Rewards
- Benefit: Loyalty programs associated with subscription services offer additional perks or discounts.
- Example: Airlines offering frequent flyer programs with additional benefits for loyal customers.
In toto subscription is highly beneficial for eCommerce business. But there are always two sides of the coin. Let’s have a look at the other side.
Cons of Subscription Service
We have discussed ample benefits of subscription services, but it’ll be better if the cons are also considered.
- Frequent cancellations would lead to high turnover of customers.
- Demand fluctuations are what you must be aware of.
- Some amount of customers can misuse offers provided by sending them to multiple users.
- There is a high chance of your customers losing the premium feeling as the products get cheaper.
- Coping with inventory and logistics is a tedious challenge.
Now, to assist you better in picking the right subscription model for your eCommerce store. We will discuss different types of eCommerce subscription models.
Types of eCommerce Subscription Model
As we are all aware, eCommerce subscription models have gained popularity due to their ability to provide a steady stream of revenue and enhance customer loyalty. Here are several types of e-commerce subscription models that businesses can adopt:
1. Replenishment Subscription Model
- Description: Customers subscribe to receive regular shipments of essential products they routinely use. This model is based on the predictable replenishment of consumable goods.
- Examples: Subscription for household cleaning supplies from companies like Grove Collaborative or a monthly subscription for pet food from Chewy.
2. Curation Subscription Model
- Description: Curated selections of products are sent to customers based on their preferences or a monthly theme. It offers a personalized and surprise element to the subscription experience.
- Examples: Birchbox curates and delivers beauty samples, Blue Apron provides curated meal ingredients and recipes, and Loot Crate surprises subscribers with geek and gaming-related items.
3. Access Subscription Model
- Description: Subscribers gain access to exclusive content, features, or early releases, creating a sense of exclusivity and added value.
- Examples: Amazon Prime offers subscribers exclusive access to Prime Video, early access to deals, and free shipping. Similarly, Spotify Premium provides ad-free access and offline listening.
4. Surprise Subscription Model
- Description: Customers receive surprise items or a mystery box in each shipment, fostering excitement and curiosity.
- Examples: FabFitFun surprises subscribers with a mix of beauty, wellness, and lifestyle products, and My Geek Box sends mystery geek and pop culture items each month.
5. Discount Subscription Model
- Description: Subscribers receive regular shipments at a discounted rate compared to one-time purchases, encouraging loyalty and repeat business.
- Examples: Dollar Shave Club delivers razors and grooming products at a discounted rate, and Adobe Creative Cloud offers software subscriptions at a lower monthly cost.
6. Loyalty Subscription Model
- Description: Subscribers earn loyalty points or rewards for their continued subscriptions, creating incentives for customer retention.
- Examples: Starbucks Rewards allows customers to earn points for purchases, leading to free drinks, and Sephora’s Beauty Insider offers rewards and exclusive perks.
7. Accessories Subscription Model
- Description: Subscribers receive regular shipments of accessories or complementary products, allowing them to regularly refresh their style.
- Examples: Rocksbox offers a subscription for renting and swapping jewelry, and Sock Fancy sends unique and stylish socks each month.
8. Digital Subscription Model
- Description: Subscribers gain access to digital content, services, or online platforms, providing convenient and on-demand access.
- Examples: Netflix provides streaming access to a vast library of movies and TV shows, and Spotify offers on-demand access to a vast music catalog.
9. Tiered Subscription Model
- Description: Different subscription tiers offer varying levels of access, features, or benefits, catering to different customer needs.
- Examples: Dropbox offers free and paid tiers with different storage capacities, and LinkedIn Premium provides various tiers with additional features for job seekers and professionals.
10. Meal Kit Subscription Model
- Description: Subscribers receive pre-portioned ingredients and recipes for a specified number of meals, simplifying the meal planning and cooking process.
- Examples: Blue Apron delivers weekly meal kits with fresh ingredients and recipes, and HelloFresh provides meal kit options for various dietary preferences.
11. Product Discovery Subscription Model
- Description: Customers receive new or trending products to discover and try, offering a sense of novelty and exploration.
- Examples: Bespoke Post sends curated boxes with unique and themed lifestyle products, and Ipsy delivers personalized beauty products for discovery.
12. Renting Subscription Model
- Description: Subscribers pay to rent products for a specific duration instead of purchasing them, allowing them to access high-quality items without a long-term commitment.
- Examples: Rent the Runway offers designer clothing and accessories for rent, and Le Tote provides fashion rental subscriptions for everyday wear.
13. Freemium Subscription Model
- Description: Basic services are offered for free, with premium features available through a subscription, providing users with the option to upgrade for additional benefits.
- Examples: Spotify offers a free version with ads and a premium version with ad-free listening and offline downloads, and Evernote provides basic note-taking for free with premium features for subscribers.
14. Customization Subscription Model
- Description: Subscribers can customize their shipments based on personal preferences, ensuring a tailored and personalized experience.
- Examples: Stitch Fix allows customers to receive personalized clothing selections based on their style preferences and feedback, and Trade Coffee offers personalized coffee subscriptions based on taste preferences.
15. Membership Subscription Model
- Description: Customers pay a recurring fee to be part of an exclusive club with various benefits, creating a sense of community and loyalty.
- Examples: Amazon Prime provides members with benefits such as free shipping, access to streaming services, and exclusive deals, and Costco’s membership offers access to bulk discounts and exclusive products.
Conclusion
All in all, the Subscription feature is a must-have as it has ample benefits for online businesses. Moreover, this feature can be beneficial to all types of businesses. It will assist businesses in curbing the restrictions and provide positive results. So implement it now and start reaping benefits ASAP.
