As the global digital commerce industry continues to evolve, many e-retailers in various market verticals are turning their focus to subscription e-commerce. Here’s how to implement it more effectively in 2024.
The numbers speak for themselves. As the research data demonstrates, the world’s subscription e-commerce has lately increased by over 60% and is expected to exceed the impressive value of 904,000,000,000 USD by 2026. Quite predictably, such stunning growth can’t but encourage more e-retail businesses, wishing to set their offerings apart, to explore their business opportunities in this niche.
With the right approach taken, implementing subscription offerings can help improve e-commerce brand recognition and reputation, helping distinguish the company as a leading competitor on the market, particularly in saturated and competitive niches, like cosmetics, for instance.
More importantly, adding subscription offerings to the vendor’s e-commerce portfolio can help reduce churn, increase repeat purchase rates, as well as upsells and cross-sells, and ensure predictable revenue management, hence sustainable profit results.
The Track Me Fast team delves into some of the best practices in subscription e-commerce, worth implementing in 2024.
Optimization of E-commerce Subscription Offerings
One of the key drivers behind customers’ willingness to subscribe to particular e-commerce offerings is their desire to try out something new, customized to their needs and preferences, and at an affordable price.
In view of this, some of the major demands towards the offered subscription selection are the provision of highly-personalized products/services, as well as flexible fulfillment options, with the right price/value balance in mind.
Namely, it’s highly recommended that an e-commerce company puts sufficient time & effort into the research & selection of the most optimal subscription model, based on the detailed historical & predictive analysis of market dynamics, saturation, competition, average gross margins, average customer churn, demographics and other socio-economic factors.
- Among these, a replenishment model, for instance, usually becomes the primary choice for vendors of various household supplies, personal care products and even groceries, based on their persistent customer habits.
In this respect, the value proposition implies predictability of fulfillment, flexibility of delivery and often a slightly discounted price, while the vendor can maintain repeat purchase levels in the key product categories.
- Meanwhile, a curation model, which implies the regular supply of a curated, highly-personalized selection of items to consumers at a recurring fee, might be a good choice for cosmetics, skincare and book vendors, where “a pleasant surprise” effect is anticipated more frequently and achieved easier.
Quite predictably, the value proposition in this case is built around the emotional factor and the businesses’ opportunity to evoke the so-called “wow effect” in their customers, boosting their buyers’ loyalty and improving their overall brand reputation.
- As for a so-to-speak “access” model, this mostly focuses on providing people’s exclusive access to special offers, bonuses and privileges, as well as enhanced experiences, which aren’t available for those, who haven’t subscribed yet.
The scope of use of such subscriptions is rather vast and includes content platforms, streaming services and even limited gym memberships, with the value proposition being based on the benefits of “exclusivity.”
Mitigating Risks & Overcoming Possible Challenges
While the benefits of implementing subscription e-commerce seem quite obvious, there are hidden challenges, which vendors should keep in mind, in order to mitigate possible revenue risks and maintain desired subscription rates.
Namely, along with the insufficiency of quality market research and analysis, one of the biggest possible issues is overcomplication of the offered subscription plans, often in tandem with the lack of purchase funnel optimization.
In this respect, while keeping the onboarding process clear and comprehensible is crucial, ensuring quality customer care is absolutely vital, especially when the subscriptions are scaling, triggering more issues with inventory fulfillment, logistics and shipping.
Last but not least, keeping the creative driver intact is also important, given the inevitably rising frequency of the so-called “subscription fatigue” with time. After all, like it or not, keeping one’s customers satisfied means keeping the business afloat.