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Subscription sales in an online shop - in which industry will it work best?
Subscription sales are the future of e-commerce. It provides shoppers with a convenient, personalized and less expensive way to get the items they need on a regular basis. Launching the subscription will help maximize revenue and increase customer satisfaction and loyalty. Find out what the subscription model is, its benefits and in which industry it will work best.
CONTENTS:
- What is subscription sales?
- Popularity of subscription online shopping
- Subscription sales models
- What can be gained from subscription sales?
- What are the benefits of subscription sales for customers?
- What is the best industry for subscriptions?
- How to stand out in the subscription market?
- Non-obvious examples of selling in a subscription model online
- Thinking about subscription sales? Check out IdoSell
What is subscription sales?
Subscription sales Subscription sales is a business model that enables the cyclical delivery of selected goods at intervals indicated by the customer, without the need for further orders until the subscription ends. It is certainly one of the most interesting sales models, as consumers gain convenience and retailers gain regular profit..
Popularity of subscription online shopping
Subscriptions are primarily associated with access to digital products - music, films or series and SaaS solutions. The trend for selling via subscriptions has also reached e-commerce and is attracting more and more attention from companies in more industries every year. Subscription-based online shopping is becoming more common and this does not seem to change. In e-commerce, it is no longer enough just to acquire a customer. You must build a long-term relationship with customers and make them want to return to your shop. This is exactly what is possible with subscription sales.
Subscription sales models
There are three main subscription models that we can use in online shops:
Access subscriptions
Access subscriptions, also known as service-based subscription models, involve customers paying, for example, a monthly fee to access certain products or services.
One of the most famous examples of an access subscription is Netflix, where customers pay monthly for access to films and series. It is also Spotify, which offers streaming music, or Adobe Creative Cloud, which is software for creating graphics and design.
Recurring subscriptions
Recurring subscriptions refer to products with a repeating purchase. The customer commits to regular payments for access to a specific product or service for a set time period. This could be, for example, a subscription to cat food. When purchasing it, the consumer decides to make a subscription purchase on a shipping cycle of e.g. 14 days. This means that the shop will create a new order containing the chosen food every 14 days and regularly charge the customer for the product.
With recurring subscriptions, companies can increase their revenue and liquidity as they expect regular revenue from their customers. For consumers, this means regular access to a product or service for an extended period od time.
Selected subscriptions
Selected subscriptions are great for people who love surprises, for example. In this type of subscription, the customer regularly receives various products that the supplier selects for them. Examples of this subscription model could be, for example, product samples or mystery boxes.
In the beauty industry, for example, the customer can choose the type of cosmetics he or she wants to receive. The shop prepares the products of its choice and sends them to the customer periodically.
What can be gained from subscription-based sales?
There are a number of advantages to subscription-based purchasing for both sellers and customers. By launching sales in this model, you will gain, among other things:
- Higher customer retention rates
Providing services or products in a subscription model increases customer lifetime value (CLV) by up to three times. Being able to purchase products or services in a recurring model retains shoppers for longer, increases their loyalty and therefore maximizes the shop's revenue. Constant use of a particular service and repeated interactions with a company make the customer feel satisfied with both the availability of products and the predictability of costs. Higher customer retention rates ensure business stability. - Reduced marketing costs
Acquiring a new buyer is much more difficult and costly than retaining an existing one. The subscription sales model reduces the need to acquire new customers and therefore saves the marketing budget. - Easier control of sales and inventory
Unlike the one-off payment model, the subscription business structure eliminates the uncertainty associated with restocking. Knowing which products and in what quantity customers order will more accurately determine when the range needs to be restocked. As a result, controlling and managing stock becomes a less demanding task. - Constant and predictable revenue flow
Knowing the number of subscribers in an online shop will make it easier to predict the turnover rate. Imagine that customers order products months or even a year in advance. This gives us information about the number of customers in each period, how long they intend to stay and the revenue they will generate. Purchasing services or products in a subscription model allows e-commerce businesses to realistically forecast revenues, introduce new services, plan logistics processes or advertising campaigns.
What are the benefits of subscription sales for customers?
- Better control of the household budget
By making recurring payments, consumers can more easily predict their spendings, allowing them to better manage their household budget. - Time saving
A customer who enrolls in a subscription does not have to think about the next orders. As a result, he or she will save the time which would have been spent to go through the purchase path again. - Convenience
By opting for a subscription, the customer no longer needs to worry about forgetting to purchase and suddenly being left without a product or service. The company will take care of logistical issues and will always deliver on time. - Flexibility and attractive prices
Loyalty to the company often pays off with lower prices and various discounts.
Which industry is best for subscriptions?
If you have products that are great for recurring sales, it is worth thinking about incorporating them into the subscription model. Industries, where this model is particularly effective are:
- Health and beauty
Products related to health and beauty, such as cosmetics, dietary supplements, or skincare products, are ideal for subscriptions. Customers can receive their favourite products on a regular basis without the need to reorder. - Food and beverages
Food products such as coffee, tea and snacks are another industry where subscription can be successful. Customers can order them automatically, saving both time and money. - Household products
Toilet paper, paper towels or cleaning products are often purchased regularly, so a subscription for these products is tailored to the needs of a wide range of customers. - Pets
Pet food, treats or toys are great for subscriptions – pets need these products on a regular basis and a subscription allows their owners to stock up the products regularly. - Crafts and hobbies
Products related to crafts or hobbies, such as sewing materials, drawing tools or models, will also work well in a subscription model. Customers can receive new products regularly, allowing them to develop their interests.
How to stand out in the subscription market?
What will make your business unique from the competition? Do you have a strategic driver that will attract customers directly to your site? These are key questions you need to answer before you start your subscription sales.
Remember that subscription commerce is about choosing the right products, surprising customers, and adding value to their lives. Think about how to deliver a unique experience to consumers and build a strong and long-lasting relationship with them. Make the product personal so every time they pick up a subscription product, there is excitement. Subscription customers are most motivated by financial incentives, such as discounts. Convenience, cost-effectiveness, and a personalized experience are the most important to them. Yet, they also value the ability to unsubscribe at any time.
A key challenge for all subscription e-commerce providers is matching supply and demand. Consumers are much more likely to cancel when they can't align the delivery date with their actual needs - for example, if they are going on holiday. Ensure that your subscription is flexible, and the customer can change the date of the next delivery.
Non-obvious examples of selling in a subscription model online
- Subscription sales of flower deliveries
Flower shops offer subscriptions so that customers can receive regular flower deliveries to their home or office. - Lingerie subscription
Customers pay regularly for access to new lingerie collections or sets, which are delivered to them every month or several months. - Subscription to plant care services
Companies offer a subscription to plant care services, where they regularly provide fertilizers and other products needed for plant care. - Subscription to cleaning products
Stores offer a subscription for cleaning products. This can even include toilet paper delivered periodically to the customer. - Intimate hygiene products for women in subscription sales
Shops offer a subscription supply of selected hygiene products, such as sanitary pads or tampons. They can be tailored to a woman's individual needs and preferences.
Thinking about subscription sales? Check out IdoSell
In addition to the product or service itself, the customer experience is one of the key traits today. It has a big impact on why shoppers will choose your online shop over a competitor's. The only way to fully reap the benefits of subscription is to choose a platform that provides full control, convenience, and technological support.
IdoSell is the right business partner. We will be launching a new service - the subscription sales module - in the coming weeks. You will launch the functionality easily with no additional implementation fees.
The subscription model allows you to create a stable and predictable source of revenue for your business. It is also an excellent way to build customer loyalty, due to the continued use of your company's products or services.
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