[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.the-future-of-commerce.com\/2022\/06\/06\/what-is-subscription-commerce-definition-models-examples-benefits\/#BlogPosting","mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2022\/06\/06\/what-is-subscription-commerce-definition-models-examples-benefits\/","headline":"Subscription commerce: Models, benefits, examples inside the e-commerce box","name":"Subscription commerce: Models, benefits, examples inside the e-commerce box","description":"Subscription commerce surged during the pandemic and shows no signs of slowing down. Learn why it's booming, and everything else you need to know about this business model.","datePublished":"2022-06-06","dateModified":"2022-06-05","author":{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/contributor\/emily-kelly\/#Person","name":"Emily Morrow","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/emily-kelly\/","image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/283f827308e9964415916a9beba427c6?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/283f827308e9964415916a9beba427c6?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"The Future of Customer Engagement and Experience","logo":{"@type":"ImageObject","@id":"http:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2020\/03\/logo-fcee-schema-app.png","url":"http:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2020\/03\/logo-fcee-schema-app.png","width":278,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2022\/06\/subscription-commerce_1200x375.jpg","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2022\/06\/subscription-commerce_1200x375.jpg","height":375,"width":1200},"url":"https:\/\/www.the-future-of-commerce.com\/2022\/06\/06\/what-is-subscription-commerce-definition-models-examples-benefits\/","about":["B2C Commerce","Commerce","Commerce","CPG","Direct to consumer: D2C","E-Commerce","E-Commerce"],"wordCount":1409,"keywords":["Future of Commerce","Future of E-commerce","Future of Retail","Future of Shopping","Subscription Commerce","Subscription Models","Subscription Services"],"articleBody":"What is subscription commerce? Subscription commerce is a business model where customers pay a recurring fee to receive products or services at a regular cadence, and it’s booming.From gym memberships to meal kits to streaming services, subscription commerce is an integral part of how we shop today. Over the past decade, it’s become even more prevalent, with COVID-19 prompting a huge surge of new subscribers to all types of businesses.Even as shoppers return to pre-pandemic habits, subscriptions are still going strong \u2013 23% of consumers who started new subscriptions during the pandemic plan on continuing them.Let’s dig into this e-commerce trend and how brands can succeed in the subscription business.      B2B subscription models: A guide to future-proofing your enterprise                B2B subscription models can offer the same bottom line and loyalty benefits as their B2C counterparts, and enterprises are taking notice.      Types of subscription commerce models and examples of subscription services workAs customers continue to expect simplicity and convenience with their purchases, it’s probably only natural that subscription commerce would rise in popularity. Have a product or service that you love and use on a regular basis? Why worry about restocking or paying a bill each month when it can automatically be done for you?Following are the three main subscription commerce models, along with examples of subscription services, what they mean, and how they work:\u00a0Access subscriptions (a.k.a. the membership model): Subscribers purchase access to content and perks, like gated content, discounts, and exclusive products. Think streaming services, magazine or news subscriptions, and gym memberships. For example: Netflix, Forbes, FableticsCuration subscriptions (a.k.a. the box model): Subscribers purchase regularly scheduled, curated “boxes” of products, usually based around a specific vertical or theme like clothing, pet supplies, beauty products, or food. For example: FabFitFun, BarkBox, HelloFreshReplenishment subscriptions (a.k.a. the subscribe-and-save model): Subscribers sign up for regularly recurring deliveries of specific products that are used frequently, often at discounted rates. Think paper goods, vitamins, household supplies, laundry detergent, grocery staples, etc. For example: Amazon\u2019s Subscribe and Save, or auto-replenishment through specific retailers and brandsOf course, which model you choose depends entirely on your product or service offering.      Subscription business models: Start small, plan big, reap rewards                70% of organizations are deploying subscription business models to sell directly to consumers \u2013 thereby creating recurring revenue and customer loyalty.      Subscription commerce benefits: Happy customers, happy companiesSo, why are we so keen to hit subscribe?Subscription commerce is appealing to brands and shoppers alike because it offers a ton of benefits for both consumers and companies.For businesses, subscription commerce benefits can include:Providing predictable, recurring revenueEnabling deeper relationships with customers and boosting loyaltyGranting access to valuable customer data and customer insightsIncreasing average order value (AOV) and customer lifetime value (LTV)Reducing customer acquisition costsMaking it easier to plan and manage inventory accuratelyAnd for customers, subscription model benefits include:Ease and convenience (the feeling of something being “taken off their plate”)Perks like discounts, curated experiences, access to gated contentThe ability to try new, often elevated, products from a trusted brandSurprise and entertainment through \u201cmystery box\u201d subscriptionsOpportunities for personalized shopping experiences      The future of shopping: Here we are now, entertain us                The future of shopping is entertainment. It's not enough to have an online storefront \u2013 brands must do more. Consumers today are looking for novel, immersive, and entertaining shopping experiences.      Get going: How to adopt a subscription-based business modelWith so many benefits, more and more brands are exploring ways to implement a subscription commerce model.Some products and services (such as streaming content, or cleaning supplies) are a natural fit.In 2021, the Beauty & Personal Care and Food & Beverage industries accounted for 54% of total subscribers. And the Health & Wellness industry saw 138% growth in monthly recurring revenue.Others aren\u2019t a good fit. For example, high-price items like cars and luxury watches are bought infrequently and typically are a more involved purchase from the consumer perspective. Restaurants feel ill-suited for subscriptions as well, as a service-industry that\u2019s already hyper-competitive.But even these types of businesses can find ways to embrace subscriptions if they want to:Luxury product brands could offer elevated service memberships, offering access to more extensive and regular cleaning, repairs and upkeep for a premiumRestaurants could host monthly \u201cmembers only\u201d events to test new dishes, or sell exclusive kitchen staples (like David Chang\u2019s Momofuku Goods)Automotive makers, suppliers, and OEMs could offer savings, benefits, and perks for those who subscribe to their offeringsTo figure out what kind of subscription makes sense for your business, consider your customer. What can you offer them that would enhance their experience with your brand or products, and which they would use on at least a quarterly basis?      Online subscription services: 3 ways to maximize stick rates                Subscription services offer brands a lot of benefits, but retaining customers can be hard. Here are three tips for reducing customer churn.      Glow up: 4 tips for successful subscription modelsOnce you\u2019ve landed on your subscription offering, it\u2019s time to hammer out the details. Here are some tips to help you achieve subscription commerce success:Identify the core value of your subscription model, and infuse it into everything you do.Find your pricing and cadence sweet spot.Make it easy for customers to sign up, manage, and \u2013 yes \u2013 even cancel the subscription.Account for accounting complexities (deferred revenue)Identify your core value, and infuse it into everything you do.What is the No. 1 thing you\u2019re providing customers via your subscription commerce offering?Convenience? Discounts? Flexibility?Identify the value you provide and make sure it comes through at every customer touchpoint.For example, Amazon Prime is built around customer convenience while brands like StitchFix and Trunk Club offer personalized styling experiences.Find your pricing and cadence sweet spot.If you want customers to sign up for your subscription service, your pricing needs to be competitive. Too high, and they won\u2019t want to commit. Too low, and you risk losing money.Similarly, consider the frequency of both payments and deliveries. Is your offering suited for monthly or quarterly recurrence? Will you offer incentives for lump-sum payments, or keep the schedule simple?For regularly used and lower-price items like personal care items or cleaning supplies, more frequent orders are likely appropriate. For more \u201cindulgent\u201d products, like personal shopping boxes, you will likely want to keep it seasonal. More frequent, and customers may wind up canceling.      CPG industry trends: 2022 requires agility and adaptability                Consumer products companies need to get ready for more change as consumer preferences continue to shift and the market becomes even more competitive.      Make it easy to sign up, manage, and \u2013 yes \u2013 even cancel.Customers love subscriptions for their \u201cset it and forget it\u201d approach to shopping. But ease and flexibility are still key.At this point, there\u2019s hardly any learning curve for customers when it comes to subscriptions. Just make it easy to sign up, and make sure the terms of the subscription are clear.Simple steps for skipping shipments, putting memberships on hold, or even cancelling them is also crucial for a good customer experience.While making it easy for customers to not pay you may sound counterintuitive, it gives them a sense of control and builds trust. And on the other hand, not providing these options can cause them to cancel and leave negative reviews of your brand.Deferred revenue: Account for accounting complexities.With new business models come new financial complexities. When branching into subscription commerce, you need to keep track of your deferred revenue. Receiving payments in advance is great for cashflow, but it can\u2019t be classified as revenue earned until the service is rendered.This is standard, but it\u2019s important to keep your financial records clear. It can help with prorating refunds\/cancelations, and gives clear visibility to investors and stakeholders.While subscriptions are great for automatic, recurring revenue, failed payments can throw a wrench in things. Failed payments cause merchants to lose 10% of their revenue on average, and are one of the main causes of passive churn (when customers leave without actively ending their subscription). Have a strategy in place to encourage subscribers to keep their information current, and re-engage them when necessary.  In retail, speed is everything. Get tips for innovating e-commerce at lighting speed HERE."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2022","item":"https:\/\/www.the-future-of-commerce.com\/2022\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"06","item":"https:\/\/www.the-future-of-commerce.com\/2022\/\/06\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"06","item":"https:\/\/www.the-future-of-commerce.com\/2022\/\/06\/\/06\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"Subscription commerce: Models, benefits, examples inside the e-commerce box","item":"https:\/\/www.the-future-of-commerce.com\/2022\/06\/06\/what-is-subscription-commerce-definition-models-examples-benefits\/#breadcrumbitem"}]}]