Subscription eCommerce: What is it and How Does it Work?
Is the eCommerce subscription business model right for your business?
Subscription based eCommerce involves customers subscribing to a service that sends them goods or an item on a recurring basis. A customer signs up for subscription of an item, through an eCommerce website, and gives the company their credit card information which can be charged recurrently. Next they are sent the company’s product periodically, which can be monthly, biweekly, or yearly, just to name a few of the possible options.
Types of Subscriptions
There are numerous types of eCommerce businesses that have chosen to use an eCommerce subscription based model. Some top retailers, including Amazon and Target, allow you to choose items to be delivered to you every month. Some eCommerce companies, such as Birchbox and Ipsy, found their niche by sending out quality samples every month to their subscribers. Another type of eCommerce subscription that customers can sign up for is having necessities, refills and replacements sent to their door through services, such as Dollar Shave Club.
Do They Work?
The short answer is yes, subscription based services can work for your customers and for your company. One of the keys to make subscriptions work is finding your niche and offering to help your customers easily get the items that they need or want periodically. Below are just some of the ways that eCommerce subscriptions benefit both customers and businesses.
Why Subscription eCommerce Works for Customers
One of the reasons subscriptions are so attractive to customers is the convenience. They don’t have to go out and buy an item or get on the company’s website every month to buy the items they want or need. A shipment shows up at their doorstep every month or so without the need for them do to anything except for sign up for the service one time. Sample subscriptions work for customers because they let them try items for a small fee considering how expensive it would be to buy the full size products of the brands they send. They are able to discovery new products and try them before investing in buying a larger amount. Customers also like subscriptions because they make the choices simple. Customers only have to answer a few questions in the beginning and choose how often they want their shipment. They then place the rest of the options in the hands of the subscription service. This makes the buying process easy and enjoyable for the customers.
Why Subscription eCommerce Works for Businesses
Running an eCommerce subscription service can turn out to be a great business move for many companies. Some subscription services, especially sample based ones, can see very high margins. Having subscribed customers makes it easier for your business to forecast its revenue and shipping expenses and calculate the lifetime value of your customers, which is often higher with subscription services. Another perk is that revenue is constantly being generated for the business. If you operate your subscription based business right, it can be a very successful venture.
Clarity Can Help
One of the keys to running your subscription based eCommerce service successfully is having a robust and flexible eCommerce platform for your website to run on. At Clarity, our team specializes in finding the right eCommerce platform for each of our clients. We also built our own eCommerce platform, Clarity eCommerce, to provide our clients with an eCommerce platform that can perform and deliver. To find out more about how Clarity can help your business expand into eCommerce subscriptions, call or click to contact us today!