Subscriptions: A new e-commerce model
E-commerce is a very flexible niche. It’s easy to adapt to different business models and ideas. One such model is the subscription model – a perfect way to build a stable online business. Let’s have a look at what a subscriptions are and how you can implement them in your store.
If you operate in the IT or marketing world, a subscription-based business model is nothing new or surprising to you. After all, that’s what SaaS platforms have been doing for years! You develop a product or a service, and you charge monthly or annually for access to it.
The good news is that the e-commerce sector can take full advantage of this model as well. After all, customers need a whole list of products regularly or even on a daily basis. Starting from food and beverages through childcare products, cosmetics, cleaning agents, and pet food up to underwear, and office/school supplies. All of these (and more) products can be potentially offered to customers in the subscription model.
And there’s one more piece of good news – people are, in general, keen to use subscriptions. According to a study conducted by SUBTA, the majority of US adults take part in at least one subscription program.
What is the e-commerce subscription model?
It’s a model that’s based on offering regular access to a given product without the need to go online and order it every single time. Let’s take diapers as an example. Every parent of an infant knows there is no such thing as too many diapers. So, what such a parent can do is go to Honest.com and order a subscription of diapers and wipes for their child. For $89.99, the subscriber gets a ready-made set of diapers and wet wipes. Deliveries are free and are shipped once every 3, 4, or 5 weeks, depending on a given customer’s preference.
With this model, the customer saves a lot of time. They don’t have to worry about running out of the product they need because they’ve just got a fresh delivery or they are expecting one shortly. On the other hand, the online store enjoys a stable business because customers applied for regular deliveries for a year (or longer) in advance.
And here’s another example – Joshua Tree Coffee. It’s a company that offers coffee in the subscription model. All you have to do is pick the coffee you like and set the frequency of deliveries. They have a nice and intuitive ordering process, so you know exactly what to do next.
Why should you implement the e-commerce subscription model?
Put shortly, the e-commerce subscription model allows you to achieve unprecedented business stabilization. With this model, you get a certain number of sales each month, month after month. Another important benefit is the simplified management of the supply chain. Sellers operating in the subscription model can easily plan the quantities of goods that must be supplied in a given period. As a result, the problem of goods lying on the shelves in your warehouse (so-called dead stock) is significantly minimized.
What are the challenges of implementing this model?
The E-commerce subscription model is not something you can implement overnight. You may need to prepare both your store and your offer for such a “revolution”. First off, not every store has an offer that’s good for this model. You need to verify whether there is at least one type of product in your offer that could be used for this model. Again, let’s use an example. If you run a store selling equipment for skiers, it is unlikely you’ll have anything that could be sold in the subscription model. After all, skiers don’t need to replace skis or jackets, or even helmets every month or even year.
On the other hand, if you run a store for tennis players, that’s a different story. These customers need to replace grips on their rackets regularly, especially if they are active players. That said, you could offer them a regular supply of grips, e.g., once every quarter. That’s just an example. What we want you to do is go through your offer and see if there is any potential for implementing the e-commerce subscription model, at least partly.
If you see such potential, you must adjust your e-commerce platform accordingly. If your store uses such tools as Magento (or a different e-commerce platform), Pimcore, or Akeneo – things are much easier. It’s just a matter of adjusting these tools accordingly. If you have a platform that was built from scratch, you may be looking at some advanced dev work before you can start offering such a solution.
3 types of e-commerce subscriptions
If you want to introduce subscriptions to your offer, you have three options to choose from:
- Access subscription model: It’s the most popular model, coming directly from the IT world. Customers pay monthly/annual fees, and they get access to your products on a regular basis.
- Replenishment subscription model: In this model, customers subscribe to receive regular deliveries of the specific product at regular intervals.
- Curation subscription model: In this model, customers do not know which products they will receive in each delivery. It’s a good idea if you run a store offering creative or personalized products, e.g., socks.
Implement the e-commerce subscription model with us
If subscriptions sound like something you could use in your online store, we’re happy to help! We have vast experience with all the tools we mentioned above. We’re happy to help you implement the necessary changes so that you can build a solid base of recurring customers. Would you like to find out more? Our team is ready to help!
