Subscription-centric Profits in E-Commerce
Today, e-commerce has remodeled the way business is done everywhere. With e-retail sales accounting for 14.1% of all retail sales worldwide, e-commerce continues to proliferate despite the global economic downturn. Undoubtedly, much of this growth is to be credited to increased internet usage and smartphone penetration.
What’s also growing at an exponential rate is Subscription Commerce. 15% of online shoppers have endorsed one or more subscription services. This is a huge figure, given the number of online buyers is projected to reach 2.14 billion by 2021!
Subscription-based e-commerce is clearly one of the most reliable models — providing purchasers with the needed flexibility while giving merchants the business viability they aspire to. When done well, it can serve the business in taking great strides of growth.
What is Subscription-based E-Commerce?
Subscription-based e-commerce business models are a prudent choice by consumers to purchase regular-need goods on a recurring basis instead of multiple single-time purchases. Subscriptions can be allowed on weekly, monthly, annually or any time-frequencies as favored by the customer. This model is sure to enhance your customers’ lifetime value substantially.
Types of Subscription Models in E-Commerce:
Choosing a subscription model for your e-commerce business is indeed based on your product catalog. Here, we have drawn some of the most successful subscription business models to help you get going:
1. Curation or the Discovery model aims at surprising and amusing the consumer by offering unique items or deeply personalized experiences in attire, beauty, food, etc.
2. The Replenishment subscription model allows buyers to automate purchasing items, such as fruits, personal care products, etc. Consumers commit (typically without cancellation penalty) to continual delivery of the same products. This works great for products with nearly regular consumption rates as it is convenient for customers to “set it and forget it.”
3. Bargain or access subscribers spend a recurring monthly payment to avail haggled costs or exclusive perks only for members, mainly in the garments and food sections.
Why Subscriptions are the future of E-Commerce?
1. Improved Retention
Offering a relevant subscription service will enhance your capacity to retain your consumers over time. Consumers subscribe to such services in anticipation of receiving better value from them over time.
2. Better insights on Future
Operating a subscription service can also develop your forecasting ability on future sales and revenue figures. In all likelihood, you can have the customers who may subscribe to your services for months in advance, and this ensures that you’ll have them aboard for a minimum of the mutually-agreed period.
3. Strengthened Customer Relationships:
Unhappy customers may cancel their subscriptions. Nevertheless, with subscription models, consumers are more inclined to stay, often because they build an open-ended relationship with your business and the convenient service they receive.
4. Marked Inventory Control
A subscription-based e-commerce model enables easier inventory management. You can possess a more solid notion of your inventory situation each month and predict demand and supply efficiently. Considering each purchase will always carry the same products for the individual subscription order, you can monitor stock levels and precisely determine the next order points. This lessens losses and bypasses storage concerns.
Subscriptions are swiftly becoming the new normal with e-commerce emerging posthaste. From recreation and entertainment to fitness and beauty products, consumers have sprung to embrace subscriptions in their everyday lives owing to the flexibility and convenience that they offer. When executed suitably, it is the right style of business for both merchants and consumers.
On the whole, a subscription-based e-commerce model can be employed by a diversity of businesses. Yet, if you don’t have one, you should always consider providing this choice to your customers.