Subscriptions are the fastest growing segment in eCommerce and represent a new concept of buying where a customer can save time and money

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Hot Ecommerce Trends : Subscription
Ecommerce Business Models
Zahoor
Subscriptions are the fastest growing segment in ecommerce and
represent a new concept of buying where a customer can save time
and money by receiving products/services delivered periodically as
a subscription similar to magazines and newspapers business
models with a single order. A popular example of an ecommerce
subscription is the Dollar Shave club monthly subscription that went
viral with millions of customers. Their razor-blade promoting video
on YouTube encouraged customers to buy razor blades on a
subscription basis for $2 a month. Here is that great promotional
video on YouTube:
Example of Dollar Shave Club Our Blades Are F***ing Great Ad
Subscriptions based ecommerce companies have higher
expertise and efficiency since a $39 dollar product can lead to a
$400+ dollar annual subscription purchase. In fact, subscription
ecommerce models allow ecommerce website owners to earn
higher revenues and margins, get higher retention, quick customer
feedback and order predictability. It is growing at the fastest pace
ever. Established and startup ecommerce companies are adopting
subscriptions to boost their online revenues. You can incorporate
this model in your ecommerce website when your products and
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2. services have gained a significant and loyal customer base.
Some Reasons for Why Subscription
Ecommerce is Hot?
1. Convenience to Customers:
With a subscription model, customers can save their money and
time and they don’t need to worry about out of stock items. Once
they have subscribed it, they will surely get it on expected time.
One of the best examples of subscription ecommerce is from The
Honest Co. partly founded by a celebrity influencer, Jessica
Alba. Once parents will subscribe for daily diapers for their kids,
they don’t need to schedule regular purchasing days for it. By
subscribing to diaper and wipes option, The Honest Co. is providing
a consistent delivery of necessary items that are frequently
delivered together to parents in a fast and convenient manner.
Jessica Alba promoting diapers and wipes
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3. 2. Customer Lifetime Value (CLTV)
Calculations:
Customer Lifetime Value (CLTV) is used to analyze acquisition
strategy and estimate online marketing costs. It is also defined as
expected revenue that a customer will generate during his/her
lifetime. One of the most successful ways to boost CLTV is to
improve customer satisfaction. According to a research, 5%
increase in customer retention can increase profits by 25% to 95%.
Also it costs 6-7 times more to acquire a new customer than to
retain an existing one.
3. Consistent Revenue Forecasting:
It is important to get an approximate estimate of the revenue that
you can expect from one month to other. Subscription models help
ecommerce businesses to get an idea about profit that they can
expect in future. Though it is not always accurate because nobody
knows when your loyal customer will unsubscribe from your
services or when more customers will be added to your
subscription list. Online stores should be ready for these
possibilities, but as a whole, subscription models are better ways
that make your forecasting easier.
4. Capitalizing on Expectancy (Buyer’s
Intent):
In order to retain your customers, deliver their orders on time. Keep
them updated about the whole process of delivery. If there is any
problem while delivering, inform your customers immediately.
Explain them about the problem and how you’re going to deal with
it. Follow up again and again to ensure positive results. This will
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4. help to gain trust among customers and increase customer
satisfaction.
5. Simple Shipping Plans:
Subscription models help ecommerce businesses to forecast easy
shipping plans if same product is being shipped every month. The
size, weight, shipping costs and number of packages can also be
pre-determined. This makes subscription model one of the best
ecommerce business models for maintaining revenue and shipping
records.
6. Minimum Choices Retain Customers:
It is important to keep minimum and relevant choices for a
customer while subscribing to your services. Many choices can
annoy them and they may unsubscribe from your list. With a
subscription service, consumers simply get what they order. Easy
choices like different prices and levels don’t bother them though
difficult choices like size, sex, verification, pop-ups may irritate
them.
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5. BirchBox’s Subscription for Men’s & Women’s Beauty Boxes
Conclusion:
Subscription services are a great opportunity when it comes to
retention and boosting your ecommerce revenues. Subscriptions
models help ecommerce businesses understand the customer
needs and improve marketing campaigns leading to higher
sales. Subscription based ecommerce business models are a
win-win both for consumers and ecommerce brands.
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