Subscription eCommerce: The Ultimate Beginner’s Guide
To date, approximately 54% of online shoppers have subscribed to an ecommerce subscription service. Despite the rapid rise of this blossoming sector, it remains full of untapped potential for new-and-upcoming companies to benefit from.
At Upscribe, we understand the importance of not only managing your subscriptions but growing your subscriber numbers too.
In this article, we’ll explain how you can develop, launch and successfully grow a subscription-based ecommerce service by utilizing the right strategies and learning from other success stories. Let’s go.
What is subscription ecommerce?
An ecommerce subscription enables customers to avail of a service, or/and products in a recurring manner. In most cases, companies that offer subscriptions provide a range of packages. For each given package, the same cost usually applies for every payment interval (e.g., $10 a month).
The benefits of subscription-based ecommerce include:
- A consistent and reliable source of revenue
- Generally enhances customer engagement and relationships
- Can improve customer retention
- Makes inventory organization easier
- Can significantly improve your customer’s lifetime value
Types of subscription ecommerce
There are many ways of categorizing subscription ecommerce. For the purposes of this section, we’ll break it down based on what exactly you’re offering customers.
One of the most common forms of subscription-based ecommerce involves customers paying for a service. Examples include Statista, Grammarly, and Mailchimp. In many cases, users can decide what exactly they pay for when availing of a service subscription (i.e., greater customization over their payment plan).
With Statista, users can gain access to a whole host of reports along with in-depth statistics related to industry and markets, politics and society, digital trends, and more. Currently, users can access over a million statistics for $39 a month with the single account package.
Physical product subscriptions
This type of ecommerce subscription involves providing customers with physical items, generally by postal delivery. Often these subscriptions come in the form of subscription boxes.
A subscription box is the latest form of product-based subscription. In many cases, customers will have the option of curating their boxes to include certain items.
Popular examples of subscription boxes are:
- Beauty products
- Cooked food
- Puzzles and board games
- Coffee products
- Clothing items
- Kids toys
- Decorated spruces
At Upscribe, we can help you leverage your Shopify checkout to create a more seamless customer experience.
Digital content subscription
Providers of subscription-based digital content are essentially selling users intangible products (e.g., online courses, movies, TV shows, etc.). The most popular services offering digital content subscriptions include Netflix, Amazon Prime, and Spotify. Some examples of digital content subscriptions, such as Skillshare, can also be considered a service subscription.
Types of digital content subscriptions include:
- Video (i.e., movies, documentaries, TV shows, etc.)
- Music and audio
- Graphics/digital art
- Images (e.g., portraits, stock photos, and backgrounds)
How to build and launch an ecommerce subscription
The exact process of planning an ecommerce subscription service will depend on how developed your ideas already are. To cover all bases, we’ll look at each step involved, from determining what subscription to offer (and what subscription model to use) to successfully launching your service.
1. What are you selling?
Whether it be a service, physical products, or digital content, it’s important that you have a clear idea of what you want to sell.
Ideally, you should also look for an untapped niché at this stage in the process. So, for instance, if you want to provide video content as part of a paid subscription, a service that offers a broad range of movies and TV shows is unlikely to succeed, considering the dominance of websites like Netflix and Amazon Prime.
However, you may discover that there is a niché for low-budget documentaries or short films surrounding certain topics in your particular region. You’ll also need to undertake a cost-benefit analysis to evaluate whether your idea could feasibly return a profit if implemented.
2. Choose your audience and subscription model
Expanding on our point about finding your niché, you need to consider what demographics your content will appeal most to. If you’ve released some content for free on sites like YouTube or Vimeo, their respective analytics tools could help point you in the right direction.
Depending on what you are selling, one of the following subscription models will suit your website best:
- Membership – In this case, subscribers are given access to a service, products, or/and content as part of a specific membership package. In most cases, companies that offer memberships provide a range of packages to choose from. The higher the cost, the more the package should offer.
- Curation – This means selling a range of products to customers and changing what they will receive each time. Of course, customization can allow customers to choose what they receive in exchange for any given delivery interval.
- Subscribe and save – In this case, you are providing product(s) to customers on a recurring basis and offering a reduction on the cost of given product deliveries if they subscribe. This is also known as the replenishment model.
3. Developing your plans
Once you’re set on the basics, you’ll need to develop concrete plans. This is the point at which you consider the layout of your website, the specific products/content/services your website will offer, and how its pricing models will work, among other fine details.
You may want to hire various professionals to help with the key development phase, ranging from a web designer to a marketing director. Of course, for a low-budget startup, this would be more difficult compared with if you have a sizable budget to work with.
A few other points to take into account:
- The competition – You’ll need to look at who your rivals would be, whether you can realistically compete, and how you would likely fare (e.g., in relation to SEO keyword rankings, market share, etc.)
- Research other success stories – Spend time evaluating other subscription-based ecommerce sites, not just the ones you expect to compete with directly. We’ll discuss some success stories in more detail later on.
- Guided selling experience – For online shopping, you should consider how you could guide customers through the process to make things as straightforward, engaging, and user-friendly as possible.
- Consider how you will incentivize customers – Discounts are a great way of making a subscription more appealing. Of course, any discounts offered with a subscription should be equal to or greater than the discounts you tend to provide customers without the need to subscribe. You want to find ways to make a subscription extra appealing to users of your website/service.
- Emphasize the benefits of subscription across your site – If you make the advantages of signing up to a subscription crystal clear throughout your site, you’ll improve the odds of more users availing of said subscription(s). In fact, in the case of online retail, merchants who take this approach see the number of site users signing up for a subscription increase by 1.5x.
Make the onboarding process as straightforward as possible using Upscribe’s user-friendly onboarding application.
4. Launch and market your subscription
Once all your plans are in place, you’ve thoroughly studied your audience, and you feel 100% ready, it’s time to launch your subscription ecommerce platform.
It’s important that you market your subscription service effectively and that you have a plan in place for this well in advance.
Here are some ways of marketing your subscription-based ecommerce service:
- Maximize the SEO value of your website
- Start a blog
- Advertise using Facebook and Google Ads
- Add your website to various online directories
- Post your site on forums
- Utilize email marketing to promote your service
- Employ outreach marketing
Upscribe can help power your subscriptions, enabling your ecommerce business to grow and flourish.
Maintaining and learning from subscription ecommerce
Once your site is up and running and you’ve gained subscribers, you’ll want to maintain and continually grow your subscription service.
These are our top tips for maintaining and growing an ecommerce subscription platform:
- Consider how your subscription model and pricing can benefit your business goals. Don’t forget to adjust as you go based on results.
- Evaluate customer data and KPIs. Look at what demographics you are appealing most to and garner insights in general. Analyze said insights and determine how you can evolve your service to increase customer retention and gain more customers as time goes on.
- Make updates to your service/website when needed.
- Utilize auto-renewals for payments and advanced payment to increase revenue and customer retention.
- Continue to market your service to appeal to new customers. You should also consider employing trackable QR codes to achieve this.
While there are countless subscription ecommerce companies worldwide, certain examples truly stand out as success stories.
Arguably one of the best subscription ecommerce platforms is Netflix. Despite a notable drop in subscriptions in the first quarter of 2022, Netflix remains the 23rd most popular website on Earth, according to Similarweb, with a 2021 revenue figure of nearly $30 billion and more than 12,000 employees.
Starting as a delivery rental service, Netflix grew into a global giant during the 2010s taking the form of a digital media platform. Perhaps the most important factor in Netflix’s success was its ability to see ahead by converting to an online streaming service while DVDs gradually died out. Even before then, Netflix removed late fees on rental DVDs, which helped to grow the brand’s popularity.
Another part of the company’s success was the lack of competition in the space around the early to mid-2010s. If you can find an untapped niché with minimal or no competition, your service too could see a boom in growth, even if not quite to the same extent as Netflix. However, you could still employ lessons from this success story on a smaller scale.
Here are some other ingredients that arguably led Netflix to where they are today:
- Wide range of digital content to choose from
- Ad-free streaming service
- Customizing the UX to increase engagement and customer retention
- Producing their own content based on what they believe will appeal to users
- Popularizing the idea of dropping entire seasons of content at once. You could also more broadly describe this as both innovative and a way of tapping into customer desires; these approaches could certainly translate to virtually any subscription service.
A lesser-known yet nonetheless successful example of subscription ecommerce is FabFitFun, a popular provider of beauty & fashion subscription boxes.
Launched in 2010, the California-based brand embraced ecommerce after starting out as a media company that focused on reviewing a range of beauty and healthcare products. FabFitFun started out with one objective and changed course once they realized the potential of doing so. This was the case when the company experimentally sold 2,000 gift boxes to readers in 2013; all gift boxes sold out in just forty-eight hours!
In response to the various challenges concerning subscription retention, FabFitFun also chose to provide seasonal boxes (each tailored to, well, the season, of course), and it worked. Tailoring their boxes to different individuals has also helped FabFitFun to retain customers over time.
FabFitFun also took risks, such as selling gift boxes for less than they’re worth to increase subscriber retention as a way of securing long-term success. Obviously, this approach would only suit those with the capital to do so, but it shows that risks and embracing short-term losses can pay off in the long haul.
Other great examples to check out:
- Dollar Shave Club
- Stitch Fix
- Sips By
- Loot Crate
Learn more via the Upscribe blog
Today we’ve explored how to approach building and growing a subscription-based ecommerce service.
For related content, check out our blog, which explores topics ranging from the importance of how customers engage with your brand to the value of personalizing subscriber experiences to individual customers.
Schedule a demo with Upscribe today and try out various features like advanced analytics and a supercharged merchant portal, all of which can help nurture your existing subscriptions and appeal to new ones.