3 Minute Read

The rise of eCommerce subscription models has been exponential. Its success can be attributed to a number of advantages. These advantages include the customer's ability to tweak preferences so each purchase is crafted specifically for them, customers receiving gifts with every purchase, the automatic purchase function which provides the consumer with one less thing to remember, and provides your online store with dedicated recurring revenue. In this piece, we’ll break down all the ways eCommerce retailers should be incorporating subscription models into their business plans.

Monthly Subscription Models in the eCommerce Space

According to Investopedia, “Subscription business models are based on the idea of selling a product or service to receive monthly or yearly recurring subscription revenue. They focus on customer retention over customer acquisition.” And they are wildly successful. At least 54% of the 2.14 billion global online shoppers have at one time or another subscribed to a subscription box, service, or experience. Over half of those 50% have been or are currently subscribed to more than one plan. Over 25% of that 54% have six or more subscriptions. The industry itself has grown 200% annually since 2011 proving this model to be something digital retailers should be including in their business plans.

The First Subscription Model and Why It Succeeded

It is commonly known that in 2010, BirchBox, a monthly beauty and grooming subscription box, was the very first to create subscriptions for its online retail store. Once Birchbox launched its subscription service, the company gained 850,000 subscribers in a little over three years. For a small subscription fee, customers receive an assortment of sample beauty products curated by a customer’s very own beauty advisor. The Birchbox difference? If a customer loves a product sample, they can pop onto the BirchBox eCommerce website and purchase a full-sized version of that product. This try-before-you-buy model proved to be a tremendous success globally. 

With over 15% of online consumers now having signed up for one or more digital subscriptions, this trend will continue to become a mainstream method for consumers to purchase goods and services. 

Types of Subscription Models

Not all subscription models are created equal. From curated subscription boxes to service subscriptions to digital content subscriptions, the options for consumers (and business owners) are seemingly limitless. Let’s review the different forms of subscription models.

The Curated Subscription

Curated Subscription Boxes make up for over 50% of all subscription models and are exactly what they sound like: a carefully curated collection of items sent to a consumer’s door based on their preference/sizing information. BirchBox being the first company to provide such a thing, this model has become the main way most consumers now receive goods. Some other curated subscription examples include Stitch Fix, Maple Box, Fuego Box, Nurse Lux, BarkBox, and so very many more. When people think of subscription models, this form is often the first they think of.

The Digital Content Subscription

According to meetanshi.com, “This type of subscription aids customers in accessing online content easily.” Digital content, of course, being defined as information that can be digitally broadcast, streamed, or contained in computer files. Juniper Research says that “digital content revenue [will] exceed $432 billion globally by 2026” which demonstrates just how quickly these eCommerce subscription models are growing.  There are many examples of digital content subscriptions such as Netflix (which is another shining example of successfully building out a subscription model plan from analog to digital), Audible, Spotify, The New York Times, MasterClass, and more. 

The Services Subscription

The Services subscription model is defined by a consumer’s ability to pay for a service they regularly need for the same fee each month so that the service is always available. Some examples of this business model include eCommerce platforms such as BigCommerce, and Shopify as well as services such as Scalability, MailChimp, foundersuite, and Statista.  Many digital services are trending towards subscription plans due to their convenience and low upfront costs.  Ecommerce subscription models are also massively increasing customers’ lifetime value and helping companies provide consistent, quality products and services to consumers at a reduced rate.

Why Subscription Plans Are on the Rise

There are a multitude of reasons why consumers sign up for subscription plans. Chiefly of those are value and convenience. For many, making monthly small payments over the course of a year is more feasible for their budget than making a single large payment. And with automatic payments, subscribers don’t even have to remember to pay their bill. They no longer have to travel to pick up their items. They are delivered to their door with ease. The variety available for subscribers is unmatched, as well. The consumer’s ability to sample and experience items or services they might not have ever thought to purchase or even know about is a big plus. With all these selling points and more, this business model will clearly continue to reign supreme.

TL;DR

Subscription models for brands are no longer a fad or wave of the future but are now the dominant way consumers receive goods and services. Why? Hassle-free living and access over ownership. According to Forbes Magazine, “People want to experience all that life has to offer, and since acquiring things no longer dictates your class or status in life, millennials are simply enjoying experiences over things, access over ownership.” Have you thought about how a subscription plan could elevate your eCommerce business? If not, you may be missing out on a huge opportunity to learn just how loyal customers are and could be to your brand.

 

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