In 2012, Darren Dahl wrote an article for The New York Times about the trending product-by-subscription business model. Adobe Systems recently switched to this model by making customers rent its software on a monthly basis. This presentation focuses specifically on the company Shoedazzle, how it utilizes this business model, and why it works for them.

1. Online Retail Subscription:
How and why does it work?

2. What is an online retail subscription? It is a
product-by-subscription business model.
Customers pay a monthly fee, similar to a
Netflix subscription, in order to receive exclusive
membership benefits.

3. What are the benefits of a
membership?
•Exclusive prices
Shoedazzle offers members a lower “VIP”
price
•Free shipping and returns on any
order
•First chance at sales
Receive alerts before items go on sale
•Occasional free spending credit

4. How does it work?
New customers are drawn in with a special one-time promotion
plus free shipping and returns
Shoedazzle offers new customers 25% off first purchase and free shipping
After your first purchase, you are given the option of becoming
aVIP member to continue receiving benefits.
AVIP member pays a monthly fee.
Monthly Fee = Store Credit akaVIP dollars (for you to spend or save)
Some sites will give you the option to “skip the month”
Some sites will automatically make you a member after the first purchase

5. Why does it work?
#1.Visual Gain vs.Visual Loss
Would you rather see:
$35.95 + shipping $4.95
Order Total: $40.90
OR
$35.95 -VIP dollars $9.95
shipping: FREE
OrderTotal: $26.00
Every month your credit card (CC) is
automatically charged the monthly fee
$9.95 and that fee becomes your VIP
dollars.
VIP dollars are for you to spend on
purchases and are deducted from the
order total, appearing as if you
received a discount

6. #2. Accumulation and Expiration
• If you do not spend yourVIP dollars, they will accumulate, but
they will expire after a certain number of months
• As the number in your account increases (VIP dollars:
$19.90...$29.85) and/or the expiration date gets closer there is
an incentive to spend it.
Even if the customer does not make a purchase every month, Shoedazzle
can still expect to earn at least $9.95 a month per member.

7. #3 Loyalty
“A subscription model allows you to establish
long-term relationships with customers as
opposed to selling them one pair of shoes and
hoping they come back.” ~ Co-Founder Brian Lee
Membership
Incentive to stick to Shoedazzle
Familiarity
Trust
Loyalty