Did you know the subscription e-commerce market would reach $473 billion by 2025? From grocery deliveries to streaming services, subscription-based business models are everywhere. There has been a drastic shift in the business model, where customers buy “as-needed,” to one where they sign up to receive the product or service on a regular basis. These days, customers try to save time by eliminating items from their to-do lists with easy auto-renewals.
As long as the businesses continue to deliver value through their subscriptions, businesses can expect stable revenue and increased levels of client engagement.
Today, more than 50% of internet shoppers use a subscription service for e-commerce. There has never been a better time to launch a subscription model for your business.
Key Statistics:
- The subscription E-commerce industry grew by 100% in the past five years.
- 15% of online shoppers have at least one subscription.
- Over 50% of e-commerce service subscribers have more than one active subscription
- 69% of US households now subscribe to one or more video streaming subscription services
What is Subscription E-commerce?
E-commerce subscription is a business model that allow customers to continuously receive a product or service for a fixed period of time for a certain amount. With subscription services, you and your customer have an ongoing contract in which they agree to pay for access to your goods or services on a regular basis, such as once a month or once a year.
Examples of subscription-based businesses are Netflix, Amazon Prime, Disney Plus, Shopify, NetSuite, Azure, AWS, Mailchimp, etc.
Types of Subscription E-commerce
There are 2 types of subscription e-commerce models; B2B e-commerce subscription and B2C e-commerce subscription.
- B2B subscription models allow companies to sell to other businesses on a recurring, automated basis — and popularity is on the rise.
- B2C subscription models enable the end consumers and customers to avail themselves of the subscription and take full advantage of the goods and services that the company has to offer.
Subscription E-commerce Models
1. Replenishment/ consumables subscription E-commerce model
This kind of subscription model enables you to simplify the process of your consumers’ routine purchases. They would often need to replace these goods after a few days, weeks, months, or even years.
E-commerce businesses can send customers repeated, routine deliveries of consumable goods using the replenishment subscription model. Without them having to repeatedly make a transaction. To put things in perspective, companies that offer food, groceries, or items like razors, toiletries, body care products, flowers, etc. typically use this type of subscription E-commerce model.
A good illustration of an online store adopting this subscription model is Dollar Shave Club.
2. Curation or discovery subscription e-commerce model
This E-commerce subscription strategy focuses on providing the consumer with “surprise and delight” by either including new things or highly tailored experiences in the subscription boxes. Online stores in the fashion and apparel, beauty, health and wellness, food, etc. industries adopt this subscription revenue model.
Birchbox, a monthly beauty and grooming subscription box that customers can subscribe to based on their requirements is a fantastic illustration of this.
Another illustration is The Style Cracker Box, which offers an online questionnaire for customers to complete in order to determine their individual style preferences. Then, in response to those selections, they ship out things on a subscription basis, surprising the client when it arrives.
3. Bargain or access subscribers’ subscription model
In this kind of subscription E-commerce strategy, a company usually allows online customers to pay a monthly fee to just take advantage of discounted prices or members-only access to discounts, promotions, and other benefits. This subscription E-commerce model is widely employed in sectors including packaged goods, fashion and apparel, and health and wellness.
A notable illustration of this kind of subscription-based E-commerce business model is NatureBox.
In reality, Amazon also follows similar business model, giving customers who subscribe to the product an additional percentage off the purchase price.
Although the three subscription models mentioned above are the ones we frequently encounter in the e-commerce sector, there are a few more you should be aware of.
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