How to incorporate ecommerce subscriptions into your strategy
Before packing your eCommerce products into a subscription box, it's important to understand the reasons why brands incorporate subscriptions into their existing products.
Subscription eCommerce is the digital offering of products or services being delivered on a regular basis, usually monthly, with payment automatically taken from the customer.
According to Shopify, the subscription economy is worth $2.5 Billion annually to ecommerce retailers. Ecommerce subscriptions have become a lifestyle habit for many customers due to their convenience and ease.
45% of 18-34-year-old customers are already enrolled in a subscription service - Pitney Bowes 2019 Online Shopping Study
The opportunity and the weakness of the subscription market lie entirely in the company’s ability to deliver a convenient experience for the consumer. According to the latest UX research after a bad customer service experience, 39% of customers will avoid a company for two years and 91% of customers who are unhappy with a brand will just cancel their subscription without complaining.
Beyond the basic of delivering a best-practice eCommerce solution, the key considerations for a seamless and convenient subscription user experience are:
- Easy to change the products ordered
- Easy to change the frequency of the delivery
- Easy to pause or cancel a subscription
This sounds straightforward, obvious even, yet many subscription services struggle with the user experience, communication and changes needed in order to ensure a smooth, frictionless subscription experience.
Subscription services generally fall into three broad categories – replenishment, curation, and access – providing either software or a physical product.
- Replenishment subscriptions allow consumers to automate the purchase of commodity items such as shaving, hygiene or contact lenses. Examples include razor subscription service Dollar Shaver Club and toilet paper subscription service Who Gives A Crap.
- Curation subscriptions seek to surprise and delight by providing new items or highly personalised experiences. Examples include personalised fashion styling services, beauty boxes to kit meals like Hello Fresh.
- Access subscriptions allow consumers to have access to services like Netflix, Amazon Prime and Stan.
Most important triggers when initiating subscriptions, data from McKinsey (2018)
6 Success Factors of Subscription Services
There are plenty of reasons to start a subscription service, assuming your business is a fit in the first place. Not least of these reasons is the reliability of the revenue stream. Beyond that, your business can operate with some sense of predictability while maintaining customers over a long term period. Successful eCommerce subscription retailers, all have the below common factors when operating their business.
Differentiation: In a highly commoditised or saturated industry, like coffee, beauty, meal kits or fashion, a subscription offering can set your brand apart and establishes you as a curator or influencer in your space.
Segmentation: With more information on subscription customers than a typical checkout, there is greater opportunity for upsells or cross-sells as well as to “surprise and delight”. It is recommended to segment and communicate regularly to each specific audience.
Stability: As subscriptions take root, you can more accurately predict inventory levels, reduce waste, and cultivate recurring revenue. Customers don’t subscribe to products because they enjoy money exiting their bank accounts every month. So this is why it is important to show value, communicate frequently and be transparent on how buyers can easily tailor or unsubscribe from your service on their terms.
Exploration: With so much choice online, many buyers see subscriptions as a simple way to “try something new” that’s highly personalised. You won't get your subscription right the first time, this is why we recommend a continuous improvement approach where you test, measure and evalaute what you have delivered to the market is still relevant and of value to your audience.
Personalisation: One of the main factors in the longevity of a subscription is increased personalisation over time—this is something to keep in mind to minimize churn.
Value: Overall price is not the key factor here, but rather value for money; as one of the key reasons why someone subscribes and churns, it’s important to manage expectations with your buyers. It is also common for eCommerce retailers to give subscribers access to prelaunch specials, cheaper shipping, and discount member-only offers and deals.
Turn any product or service into a subscription
These days, you can turn any product or service into a subscription. The top subscription platforms that our clients use are:
- Big Commerce
- Woo Commerce
- Sitecore Experience Commerce
- Episerver Commerce Cloud
- Magento Commerce Cloud
While there have traditionally been subscription categories like makeup, beauty products, razors or vitamins, today there are no rules. From a subscription perspective retail categories like socks, business apparel, coffee, prepacked meals, fitness protein powders and fruit and vegetable boxes are booming. If you sell a product online, you can 100% guarantee that you could successfully make it into a subscription product.
Since COVID-19, consumers are increasingly subscribing to products that have historically not been offered as subscriptions. The trend is being driven by consumers who have multiple subscriptions: Of the 15% of consumers who receive subscription products, 35% subscribe to three or more services. Diving deeper within this group, 18% of men and 7% of women have six or more subscriptions.
Looking to create subscriptions on your Shopify website?
Our team of Digital Engineers have helped many of our Shopify clients to evolve thier retail offering by creating custom gift boxes, subscription boxes and bundled deals by utilising Shopify app Bundle Builder.
Tim and Siya, Co-Founders - Frankees
By bundling your products, you can move slow moving products like accessories from your range. It is unbelievable the impact on sales a bundle can make by simply showcasing your products in a different way.
A number of our clients have leveraged our UX services to craft user journeys that guides their customers to bundles and high converting landing pages that showcase collections and high profit subscription boxes. It's not just another up-sell app; instead it creates beautiful, dedicated bundle pages that you can link to from anywhere in your store.
Since 2017, Shopify merchants that utilise Bundle Builder have made over $175 million in bundle sales, including $25 million during Black Friday/Cyber Monday 2020 alone.
By applying bundled discounts and conditions we have been able to direct customers towards the most profitable routes, while still empowering them to choose what option suits their needs.
Why we recommend Bundle Builder:
- Single Page Setup: All of your existing products, on a single page, ready for your customers to choose.
- Pricing Rules: Minimums, maximums, discounts and required products. You set the rules.
- Design Options: Change at a bundle, or store level, and integrate seamlessly into your store.
- Template Creation: Powerful templating, unlimited possibilities.
- Advanced Reporting: Access to in-depth reports, or JSON exporting for integration with your fulfilment company.
- World Class Support: Their support team are based in the UK and are very helpful in solving tough technical questions.
- Pricing: $25 USD a month for Shopify stores on the Shopify Basic or Shopify Advanced plan.
Speedwell is well versed in subscription commerce with over 10 years of experience. Our first client whom we built an eCommerce subscription service was for organic fruit and vegetable company Home Fresh Organics.
Built on Umbraco this subscription eCommerce business is highly customisable and provides users complete flexibility when choosing organic items to add to their subscription box.
Speedwell works closely with all our clients to develop the most effective strategy for providing digital solutions to their customers. Where appropriate, we encourage our clients to invest in enterprise platforms like Sitecore Experience Commerce, Episerver Commerce Cloud, Mageto Commerce Cloud or Shopify Plus to achieve their business objectives. If you are looking to implement an open-source eCommerce solution we also have ideas and experience doing this to suit your budget.
Our developers are focused on developing integrated, best in class eCommerce solutions. We continue to invest in the future of eCommerce platforms. Schedule a call back with our team of Digital Engineers, the safe pair of hands you need for creating your successful eCommerce solution.SPEAK WITH OUR TEAM
|John King, Digital Marketing Technologist, Speedwell