Subscription services are not a new concept. Services like the "X-of-the-month club" have been around for a long time. Long before the rise of internet shopping, stores sold wine, CDs, books, and food. Offering subscription products, on the other hand, has exploded in popularity in recent years. What was once a quirky fringe concept has now gained popular acceptance.
- 15 percent of online shoppers have subscribed to an eCommerce service in the last year, and 46% of respondents have subscribed to a digital service, according to McKinsey & Company (Netflix, Spotify, etc.)
- For several years, the subscription eCommerce economy has risen at a rate of 100% or more year over year. It was valued at $57 million in 2011. It was worth $2.6 billion in 2016
In this article, we'll go over what is a subscription product, why it's beneficial to businesses, and how you can get started and maintain one.
What is a Subscription Product?
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A subscription product is one in which a customer pays a one-time fee to gain access to a product and is billed regularly.
Offering subscription products are becoming more popular, and as more customers accept this model, they will become even more popular.
Why Would You Want to Sell Subscription Products?
Existing eCommerce stores that use a traditional sales model are really in a better position for offering subscription products than new subscription businesses that are starting from scratch. You most likely already have some cash flow and most of the infrastructure in place to offer a box.
This implies you may approach your subscription service like a marathon rather than a sprint. You don't need 10,000 members to run out of runway next week. You'll be able to scale up at a respectable rate, giving you plenty of time to perfect your process and inventory management. Above all, you already have a customer base to whom you can promote your subscription service. They already have faith in you (since they've bought from you before) and are open to your marketing.
Offering subscription products has three significant advantages:
- Improves client loyalty: by increasing the number of successful encounters between your company and its customers
- Increase cash flow: with subscription items, your customers don't have to pay upfront; instead, they must pay overtime, allowing you to earn recurring revenue
- As a revenue stream: Allowing new customers to subscribe to your product is a terrific method to generate additional revenue from a variety of client segments
Which items are better for subscriptions? There are several types of subscription products; thus, which products are best for subscriptions? Of course, this varies by business, but in general, it must be a product that your customer consumes regularly or one that is costly to purchase upfront.
Steps to Getting Started with Your Subscription Products
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1. Begin by deciding which product(s) will be available as a subscription. At first, limit yourself to one or two product offerings to see what works and how customers react. If you're a firm that offers more than one product or has ambitions to expand, this doesn't imply you can't have all of your items as a subscription. Begin with the one that is most appropriate for the audience you are attempting to persuade. This could be your best-selling item or a brand-new product that you're putting to the test.
2. Once you've decided to sell subscription products, you'll need a program to keep track of your sales and operations, as doing it manually might be inconvenient when you only have a few clients. You must manage your subscription product and subscribers as you grow; else, it will become unmanageable.
3. Billing is one of the most difficult components, especially if you offer multiple product versions with the opportunity to customize what goes on in the box or meet specific customer requirements.
4. Allow people to try before they buy. Aren't your customers ready to sign up for a subscription? Request that they purchase for a month so that they may try it out and see whether they enjoy it.
5. Allow customers to recommend your goods to their friends. Consider a strategy for clients to refer you to others from the start of your subscription business.
6. Sending a special discount with the merchandise if they refer additional people or recommend your product to their friends is another possibility. If you're aiming to scale quickly, this is quite useful. It would create a network effect that would aid in the promotion of your product and, ultimately, its growth.
7. Double-check that all product items are visible. Can a subscriber obtain your product if they sign up on the 9th of the month if you deliver on the 11th? Can a consumer change their address or halt their subscription if they travel? Take this into account and make sure your clients are aware of it so they can better comprehend how your subscription works.
Types of Subscription Products Should You Provide?
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The ideal subscription products, of course, are those that your consumers need to buy regularly. Go for offering subscription products that match the values of your clients. For example, a coffee shop with adventurous consumers might offer a monthly mystery subscription with a different roast in each package. A coffee shop with customers who don't want to run out of coffee, on the other hand, might let them choose their favorite bean and roast.
We can't advise you what to sell exactly, but we can give you some guidelines. The subscription eCommerce model works well with consumable or disposable products. Products that regularly wear out and need to be replaced fall into this category. You probably already know how effective replenishment emails are at persuading clients to reorder if you send them to them. Customers' reordering process is simply automated with a subscription option.
- Things like pet food, paper products, batteries, activewear, cleaning products, foods, and beverages that your clients will consume, use up, or wear out.
- Things like party decorations, children's toys, kitchen gadgets, or greeting cards that aren't technically destroyed but are only used once or for a short time.
- Things like clothing, shoes, ties, music, accessories, phone cases, and so on, which individuals tend to replace regularly. People frequently desire to replace these goods to experiment with new fashions and trends or to showcase a different aspect of their personality.
Selling Subscription Products: Best Practices
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Keep these basic practices in mind before you start selling things via subscription in your store.
A. Remain Focused On Your Sector or Specialization
Make sure the subscription product you choose fits in with the rest of your store. Start marketing a product that your customers will not buy simply because it suits the subscription business model. Don't just tack on a coffee box if your store sells home products because coffee is well-suited to the subscription model. Find something that complements your current business.
B. Discuss Your Clients' Requirements With Them
Consult your clients about their requirements and desires before investing in a subscription service. Conduct phone interviews and send questionnaires. Find out how your clients will utilize the subscription product most importantly. Take, for example, a pet toy subscription service. Each month, you will send two to three toys. That's fantastic for consumers who have pets who chew or break their toys, but if they don't have destructive pets, they won't sign up for the subscription.
You may also try out your subscription by making it available to your VIP customers first. If they enjoy it, make your product available to the rest of your clientele.
C. Allow Customers to Try Before They Buy
Understandably, convincing clients to sign up for monthly service is more difficult than selling them a one-time item. They want to see and feel the goods before deciding whether it is worth their money on a long-term basis. Making your subscription products available for one-time payment is a terrific method to let people test the waters.
D. Encourage Customers To Give a Friend a Membership
Do you have a hard-to-shop-for friend or loved one? It is something that everyone does. Offering subscription products and boxes has grown in popularity as a convenient method to give someone something meaningful and useful without having to spend time researching a product category.
E. Double-check That All Of Your Terms are Clear
Can clients get their stuff if they sign up on the 12th and you ship on the 15th? Can they obtain a refund if they cancel on the 4th after you bill on the 1st and ship on the 7th? Can a consumer change their shipping address to get a product if they are traveling for a month? Is it possible for them to put their subscription on hold? Can customers return or swap an item in the package if they don't like it, or do they have to return the entire box? Is it possible to make substitutions?
These are complicated topics that a typical eCommerce shop would not have to deal with, but they become major issues when it comes to subscription products. Take out a calendar and make a schedule for when you'll bill, ship, refund, prorate, cancel, and so on.
Create Subscription Website With Strikingly
Strikingly is a fantastic method to get your subscription business website off the ground. While several platforms claim to be membership website builders, just a few are designed specifically for the inexperienced creative or small business owner who is uneasy with coding and technology. Strikingly is an excellent example of a website that connects ambitious webmasters with their intended audiences.
Everything you'll need to "create your website in minutes" is provided by Strikingly. It's simple to get started with a basic website, but what if you want to give your consumers a premium membership subscription service?
Strikingly allows you to add a subscription function to your website. However, while creating a membership website, you should carefully consider both free and paid registration options. Starting a subscription products business can also pay you every month! If you build a Paid Subscription Membership on your site, your visitors will be able to pay a recurring payment to become members. Then you can provide premium members access to content that is only accessible to them.
Paid Membership is an excellent approach to offer recurring content or start a subscription service. For quarterly or yearly subscriptions, you can design many membership tiers with different prices and discounts.
ECommerce subscription products aren't going away anytime soon. Is a subscription model right for your company? Only you can answer that, but given their popularity—particularly among younger generations—it's a reasonable issue to consider. A subscription service can be a good fit for your store if you sell consumable, throwaway, or often swapped/upgraded products.