5 Reasons Why An eCommerce Subscription Model Works Wonders!

The subscription business model has been on the rise and we are going to watch it flourish more in the coming years. Online retail is expected to grow up to $525 billion by the end of 2020.

About 15% of online shoppers have signed up for one or more subscriptions and receive their products on a monthly basis.

Especially with products that are a daily necessity, subscriptions give you a guaranteed revenue increase by selling these products monthly.

Amazon has been offering monthly subscriptions for a while now with their ‘Subscribe & Save’ subscription model.

It offers a 15% discount upon subscription and on buying four to five more such products monthly.

With free shipping prime members get a 20% off on their products and the option of canceling anytime is made available too.

The advantages of the subscription business model are being experienced by multiple brands that are bringing in high revenue due to the implementation of a solid subscription offer in place.

If you are still wondering why you must offer a subscription offer, these five reasons will convince you to give it a shot!

  • Customer Retention
  • Higher ROI
  • Revenue Predictability
  • Inventory Management
  • Shopping Trends
  • Customer Retention

Customer Retention

Once subscribed, your customers won’t have to bother about buying their necessities every other month. The products they want will already be delivered when they need them. This enhances the customer experience giving you a happy, loyal customer with recurring purchases guaranteed except on cancellation. With a great customer treatment plan and by becoming their confidante in their shopping needs you gain and retain a loyal customer.

5 Reasons Why An eCommerce Subscription Model Works Wonders!
Birchbox’s Personalized Customer Experience

Higher ROI

5 Reasons Why An eCommerce Subscription Model Works Wonders!

Your business grows as you bring in more customers. Your growth relies on your efficiency with customer acquisition. New strategies to acquire more customers will have you marketing and advertising around. Getting new customers costs more than keeping current customers. But with new customers using the subscription offer, you can be assured of them staying with you longer than usual. This leads to a higher ROI. Catering to the need of bringing in new customers will pay off and you won’t have to worry about losing them.

Revenue Predictability

5 Reasons Why An eCommerce Subscription Model Works Wonders!

When businesses predict revenue, you get to an estimate by analyzing the stats of previous sales, overall expenses, and any salaries, giving you a net profit number. However, a subscription model provides a better way to forecast revenue.

It’s more difficult to predict your customer’s LTV in a regular model because there are many factors that influence repeat purchases.

In a subscription model, you can analyze customer behavior a bit easier through the lens of a subscription period.

It’s easier to problem-solve and iterate knowing your customer dropped off after their first three subscriptions (maybe they didn’t like the product/service) rather than spending precious time trying to deduce why the average time between repeat purchases in your customers was 1 year.

Inventory Management

5 Reasons Why An eCommerce Subscription Model Works Wonders!

Buying more but selling fewer causes a big loss. Most of the time you can’t quite tell how many sales you make on one product and how stocked up your inventory should be. But with the subscription model, you are aware of the amount your customers prefer or will buy. That makes management of the inventory easier and you can keep track. No losses here!

Shopping Trends

With everyone shopping online nowadays, subscriptions are on the rise of becoming a trend. Especially with the number of people impressed with what they are being offered, and the amount of convenience it brings, most customers are happy to sign up and have their products delivered on time.

Online-only subscription businesses can truly delight their customers with the element of surprise as well. By offering to uncover new, exciting hidden products each month, the customer is intrigued in receiving items that they would never consider buying individually because of the high cost. The surprise subscription creates a sense of mystery and increases the excitement to receive each package.

5 Reasons Why An eCommerce Subscription Model Works Wonders!
Birchbox’s Product Box

Last Thoughts

The subscription model is everything you need to take your business one step further — right now. The advantage it carries would have a great impact on your business. There are many companies doing this model right now. Social media targeting is also an easy option for a better reach! The timing’s perfect for you to implement a subscription model right away!

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