E-commerce subscriptions: the future of e-commerce

November 1, 2021

It's a core business model for companies like Netflix and Spotify, which offer a software-as-a-service or SaaS model, and now subscriptions have begun to spread to other industries like fashion and beauty.

In its basic form, a subscription business model is one that charges customers a recurring fee, usually monthly or annually, for access to a product or service.

But at a deeper level, e-commerce subscriptions are about strong customer relationships. Subscriptions turn customers, who already see the value your company offers, into loyal followers who become reliable sources of recurring revenue. In fact, the longer a customer uses your product or service, the more valuable they become to you. In addition, higher customer retention rates mean lower acquisition costs in the long run.

Consumer buying habits are trending toward hassle-free shopping experiences, free delivery and instant gratification. The subscription model meets all of these needs, delivering customer value with little effort and incredible growth opportunities for subscription-based businesses.

How to incorporate e-commerce subscriptions into your strategy

Before packaging your products in a subscription box, it's important to understand the reasons why brands incorporate subscriptions into their existing products.

Differentiation: in a highly commoditized or saturated industry, such as beauty, a subscription offering can differentiate your brand and establish you as a curator or influencer in your space.

Segmentation: with more information about subscription customers than a typical purchase process, there is a greater opportunity to upsell or cross-sell, as well as to "surprise and delight."

Stability: as subscriptions take root, you can more accurately predict inventory levels, reduce waste and cultivate recurring revenue.

Consumers are increasingly subscribing to products that historically have not been offered as subscriptions. What are you waiting for to incorporate e-commerce subscriptions into your strategy?

Damon Baca

Co-Founder

Crossborderit (CBIT)

www.crossborderit.com/IOSS