Brands are quickly embracing the rise of everything-as-a-service. As subscription models take center stage, learn existing challenges and how to tackle them to scale your ecommerce business effectively.
Updated:
January 25, 2023
Many ecommerce businesses are looking to add subscription models to their marketing strategy for successful expansion. For one, subscriptions can provide a steadier stream of revenue, appealing to merchants who are poised to find better methods of planning and budgeting for future growth. Additionally, subscriptions can help build customer loyalty, as subscribers are more likely to return if they know they can count on receiving the same product or service regularly. Ultimately, subscription models help ecommerce merchants save on costs associated with marketing and customer acquisition, as they can automate repeat purchases.
While there are many benefits of adding subscription options to an ecommerce business, it's essential to be aware of potential challenges in building a scalable recurring revenue program. By developing strategies to combat various risks of subscription models, ecommerce businesses can create a more robust offering.
Trends in subscription-based businesses highlight the versatility of recurring billing models, capable of adapting to a variety of industries and various verticals.
In recent years, there has been a surge in the popularity of subscription services for ecommerce stores. This model has been particularly successful in the media and entertainment industries, with streaming services delivering value in the form of new content. However, other sectors are beginning to adopt subscription models, including the food industry. For example, fast-food companies offer perks for repeat purchases, and meal delivery kits regularly provide customers with ingredients and instructions to cook meals.
The entertainment, food and wellness markets offer continuous value for customer segments, and businesses are getting more creative in structuring their subscription offering. As a result, more and more ecommerce stores will likely move to this type of model in the years to come.
Subscription offerings are unique in how they promote the usage of products or services on an ongoing basis. Among other factors, this allows consumers to acquire and sample products regularly, allowing merchants to more seamlessly optimize monthly service offerings. Coupled with integrative revenue management and subscription management technology, ecommerce business owners can more easily navigate the complexities of pivoting toward recurring models and subscription services.
There are a couple of other key benefits to both consumers and businesses that contribute to the rise of ecommerce subscription offerings:
With the option to subscribe, customers can receive their products regularly without the hassles of reordering or running out. In addition, subscriptions often offer personalized delivery options, such as deliveries based on customer preferences or tailored product recommendations. This customization allows shoppers to receive precisely what they want, when they want it — ensuring a smooth, enjoyable shopping experience at your store.
One-time purchase revenue streams are difficult to predict and harder to scale. With subscription ecommerce, merchants can focus on recurring metrics that are driving growth. It can help merchants forecast inventory needs and strategies for keeping customers engaged with their subscription products or services. As customers continue to renew their subscriptions, ecommerce businesses can build on retaining more buyers.
Many subscription services include value-added extras, such as discounts or exclusive access to certain features. This tiered system helps ecommerce businesses understand who their most active customers are and how to unlock additional value for them. Ultimately, value-added extras help increase the likelihood of customers promoting your store's products and services.
While there are compelling benefits to adopting a subscription model, there are several challenges ecommerce businesses face in optimizing their sales efforts. By developing strategies to get ahead of problems with subscriptions, your ecommerce business can build a more robust subscription game plan.
With so many companies offering subscription-based services, customers are increasingly hesitant to sign up for yet another monthly payment. As a result, ecommerce businesses need to find ways to stand out from the crowd and convince customers that their service is worth the investment. One way to do this is to offer a free trial period. This allows customers to experience the benefits of your service without commitment, and it will enable you to build a relationship with them before asking for payment.
Another approach is to offer a discount for customers who sign up for a longer-term subscription. This encourages customers to commit to your service and provides you with a steadier revenue stream.
Ecommerce brands and companies moving toward subscription models are looking ahead toward flexible product offers that adapt to customers’ changing needs. This can be a difficult task, as it requires careful planning and forecasting to ensure that the products remain popular and in demand. However, there are a few ways that subscription ecommerce companies can overcome this obstacle.
By working closely with your customers to understand their needs and preferences, you can tailor products to increase their delight. In addition, your ecommerce store can use analytics to track customer trends and identify emerging patterns. By being proactive and keeping a close eye on the customer base, it's possible to anticipate changes in demand and adjust the product offerings accordingly.
Involuntary churn occurs when customers are unable to receive or use a product or service due to circumstances beyond their control, such as a credit card being declined or an incorrect shipping address being provided. While there is no surefire way to eliminate involuntary churn entirely, ecommerce businesses can do a few things to reduce its impact. It's crucial to have clear and up-to-date communication with customers about their subscription status. This way, if there are any changes or issues, customers can be quickly notified and given the opportunity to update their information or make alternative arrangements. In addition, investing in your site's security can help reduce the amount of churn due to chargebacks and fraudulent activity.
Despite the challenges of subscriptions for ecommerce, subscriptions provide enhanced opportunities for growth for ecommerce merchants. The ability to bill customers regularly provides a steadier stream of revenue, which can be used to reinvest in the business and drive growth. In addition, subscriptions allow merchants to build deeper relationships with their customers. By providing ongoing value, merchants can create loyalty and customer stickiness, leading to long-term relationships. While there are challenges associated with subscriptions, the opportunities for growth and customer retention make them an attractive option for ecommerce merchants.
In the ever-changing landscape of ecommerce, subscription management platforms offer a practical solution to the challenges of subscription management. By automating the process of managing subscriptions, these platforms make it easier for businesses to keep track of their customers and their orders. In addition, subscription management platforms can help businesses save money by reducing the need for manual processing of subscription orders. By streamlining the process of subscription management, these platforms offer a valuable tool for businesses of all sizes — a crucial step in any rapidly scaling ecommerce business.
sticky.io helps ecommerce businesses build subscription-based revenue streams with convenience, value and peace of mind. Our platform is built for ecommerce stores that are increasingly embracing subscriptions for their long-term success in an evolving and challenging market environment.
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