Ultimate Guide: Use of eCommerce Subscription Business Model
Updated on February 20, 2023 in Ecommerce by Nishant Shrimali
Netflix and Spotify might just not be the only businesses that are using Subscription as their earring tool. If you are running an eCommerce, and wishing to grow it, here is an Ultimate Guide for you to create an eCommerce Subscription business model of your own.
You would agree with us, that acquiring new customers is possibly the toughest task in order to keep eCommerce running.
But what if a customer signs-up with you, in order to make a regular purchase? Or what if a customer pays you an advance payment for a year and you just need to deliver the product like you already do?
Well, you are going to learn how you can do all this. Without wasting any more time, here is the ultimate guide for you to create an eCommerce Subscription business model of your own.
What is an eCommerce Subscription Business Model?
An eCommerce subscription business model is a method of selling goods to your customer against a one-time subscription for a period of time until the subscription lasts.
You can break this in a simpler language, with the following situation.
A customer is interested in a long term deal that you are offering. Hence he will sign-up for the subscription and send you the payment that you have set.
Against a one-time customer, a subscription will make sure that you are having continuous sales hence improving your profit drastically.
Sounds good right? But before discussing all the subscription eCommerce business models, let us have a quick look at all the benefits that you get when you offer an eCommerce subscription service to your customer.
Benefits of using an eCommerce subscription business model
Increase in returning customer
Returning customers are often the ones who have more chances to convert and bring sales to you. And as you know, more sales means more profit.
The eCommerce subscription business model creates higher chances, and if done right can make sure that you have a higher returning customer to your eCommerce store.
Better engagement
Once a customer is subscribed, chances are that he will look for all the new features, deals, and offers that you are offering. Not only can you alert them about these offers, but the chances of their engagement are really high when they are already subscribed to you.
Better marketing
Firstly the lead generation becomes easy if you are having an eCommerce subscription business model. Moreover, you are also aware of the likes and dislikes that your customer might have.
These two pillars help you to run successful ads and have better marketing of your products.
In addition to all this, the chances of word-of-mouth marketing through your customers also increases as they trust you and would surely recommend to others when they find an opportunity to do so.
Also Read: Lead Generation Strategy in 2023
Easy to manage
Compared to other business models, running a Subscription business model is much easier to manage. You won’t have to wait every time until your next order arrives.
Rather you would already have a list of orders to prepare by the end of the month.
Also, if you are running an eCommerce just on the eCommerce Subscription business model, the goal of all your efforts would be directed towards getting the new subscription and delivering the products to the old one.
Eliminating Competition
What can be a better state of business where you have better customer engagement, better customer retention and, the least competition that you are already outranking. This is not hypothetical but a benefit of using an eCommerce subscription business model.
Once a customer is subscribed, he is going to stick to you rather than going to your competition and that’s the fact. This deal stands at least until the time the subscription is valid. Further, if you manage to keep the customer satisfied, this customer-relation can go even further.
Best eCommerce subscription business model that you can use
Replenishment Subscription Service
These are eCommerce subscription business models where a customer gets subscribed to your eCommerce to get a regular monthly delivery of your products. This could even be a weekly service.
This works best for items related to grooming, or self-care products. And the best example for this could be the Dollar Shave Club.
Curation Subscription Service
These are the subscription business models where a customer becomes a part of your subscription list in order to get the chosen product delivered in his or her footsteps. The “Choosing” part here depends on the deal you are offering.
For example, you can set up the business model where you allow the customer to choose a product each month, which would be delivered. Or in other cases, you can allow the customers to choose the category of the product, after which they will get the products, by the experts themselves. The best example of this could be Stitch Fix.
Access Subscription Service
This one would be a little hard to pull-off, but if you are offering something exclusive, this eCommerce subscription business model could bring an exponential curve in your eCommerce growth.
In it, a customer would have to access your exclusive products only if you are paying for the subscription. Most commonly you can see this in on-demand services like Netflix, but one such example is Thrive Market.
Prime Subscription Service
This is the most common eCommerce subscription business model where you are selling your products just like any other eCommerce, but along with it you also offer a premium plan.
This plan gives the customer some added benefits like one-day delivery, additional discounts, exclusive flash sale or something of your own. The most common example that you might be aware of would be Amazon Prime.
How to get your eCommerce Subscription Business Started
The benefits and the type of your eCommerce subscription business model totally depend on the way you present yourself to your audience. Moreover you would have to find the common ground between your profit and the customer’s interest in order to curate a successful eCommerce subscription business model.
Here are a few steps that can help you create your very own subscription business model in the best possible way.
Understanding the need
The very first thing you need to look for is the need for a subscription, within your potential customer. You must realize that not every niche allows a subscription model, based on the product and the frequency at which they are bought.
For example, If you are dealing with automobiles in the eCommerce, subscriptions might not work best for you. On the other hand, if you are working providing service oil for the automobiles that customers would be more likely to buy at a regular interval, you can run an eCommerce subscription.
If a customer would have to make a one time purchase only, the subscription model won’t work. Hence make sure there is a regular need from the customer that you are fulfilling.
Planning the Subscription Model
Now that you know that you need an eCommerce subscription business model, you first need to plan it out, for every step and set back that you would possibly face.
The very first thing would be understanding your potential customer.
- What is the issue that your customer is facing right now?
You need to know the answer to this. It might also be possible that your customer isn’t aware of the problem themselves, so check their buying journey. Find how you can ease the customer’s journey, and create your subscription business model around it.
- What are you going to offer?
Another important question would be the benefits of the subscription. Make sure that you have at least 3 distinct benefits of subscription that your customer would get along with the other two benefits that indirectly would benefit the customer. This would make a convalescing deal for your customer to subscribe to you.
- How would this benefit your eCommerce?
The first thing that you must remember is to make sure you don’t anticipate the profit. There should come a direct profit from the subscription and make sure you have a sustainable business. Also, count your profit on every single subscription rather than bulk subscription to make sure that you never go into loss.
The following questions would give you a great starting point to think about and create your eCommerce subscription business model successfully.
Marketing
The next important step would be marketing it right. No one would be interested if you are bluntly offering them to be a part of your eCommerce subscription business model. Hence, if you are running an eCommerce subscription service, make sure you are promoting it well.
Running PPC and social media ads can really help you in order to attract new customers first. Later you can choose the best converting platform to attract new customers. Regarding the old customer, you can contact them directly through the emails you have in the subscription list.
Fulfillment and Personalization
Lastly, when you have successfully managed to make a customer subscribe to your eCommerce, you must deliver the deal that you signed up for. Customers who have trusted you must not feel cheated in any manner.
Moreover, make sure that you reach out to them, in order to ask for feedback and the experience they had. If reviews are positive, you can use them to attract new customers.
If they are negative reviews, do work on the problems customers have faced, and if possible do offer some deal to the customer to make sure they don’t feel cheated and are convinced that the subscription was worth it.
Challenges of Creating an eCommerce Subscription Service
When you are running an eCommerce store, the chances of something going south is way higher than what you can expect. But here are the two most challenging problems that you would have to face while using an eCommerce subscription business model.
Creating your Identity
As more and more eCommerce companies are promoting their eCommerce subscription business model, creating something distinct, something that stands out as your very own eCommerce subscription service is a challenge.
Moreover, if you are in a nich where your competitors are already using this successfully, then it would be hard for you to attract their customers. Even if you manage to create a profitable offer for those customers might not unsubscribe to them and lose their money to join you.
Keeping up the Value of the Subscription
Another great challenge that you might face while you have an eCommerce subscription business model is to maintain the value that you are providing. Over time, the value that you are offering in that amount would drop.
As an eCommerce, you would have to make sure that you are aware of the trends and the demands of your customer. If you came late to this party, the customer might just not continue the subscription, which obviously is a bad signal for you.
Key Takeaways
If we would have to sum up the whole article in the three points then, here they are:
- Prepare your eCommerce Subscription business model by finding the common ground between your customer’s interest and the profit of your eCommerce.
- In order to stand out and create a successful eCommerce Subscription business model, learn how you can ease the toady’s customer journey.
- Personalization, fulfillment, and updating the value with the time are three most important aspects of running a successful eCommerce subscription service.
Moreover, in order to make sure that you do not forget to go through this article again, you can bookmark this blog, or can simply subscribe to PixelPhant free email newsletter below.
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