Long before the pandemic hit and spurred the demand for door-front deliveries, subscription ecommerce was already delivering products directly to consumers. Largely considered to be the original subscription box curator, BirchBox first kicked off its unique ecommerce business model back in 2010.
Today, subscription ecommerce continues to be a growing trend. In the year ahead, merchants across industries should take note and consider how this unique style of ecommerce might be able to boost digital sales and lead to long-term customer loyalty.
And, while traditional subscription boxes might not be the right fit for your brand, it is important to understand that there are different business models for subscriptions. With a creative approach, the right model might turn this ecommerce trend into a valuable asset for your business.
An Ever-growing Market
In 2021, we explored the benefits of ecommerce subscription models, which include access to first-party data, recurring, predictable revenue, and lowered customer acquisition costs. And in 2022, these subscription models will continue to provide many brands with ongoing value.
According to MagePlaza, 15% of the 2.5 billion online shoppers have already signed up for at least one subscription service. This indicates that not only is the subscription market continuing to grow but that there is room for more players.
However, numerous brands have yet to adopt a subscription model, feeling that this style of ecommerce sales is not a good fit for their product or service offering.
What is interesting to note about the year ahead is that much of the growth in subscription ecommerce will be because businesses are becoming more creative in their approach to subscription options. As this market grows, brands that may have previously felt a subscription model was a poor fit for their brand are reconsidering.
Subscription Ecommerce Business Models: Which One is Right for Your Brand?
Determining which subscription business model is right for your ecommerce business depends a lot on what type of product or service you sell. Additionally, the right model for your business will need to take into account your existing brand strategy. Consider the following styles of subscription services and how you might adapt the model to your brand:
The Curator Subscription
From the early years of Birchbox, the groundbreaking curated beauty product box, individual brands began to see the benefits of the curator subscription model. Many others followed suit, and the idea spread to fashion, food, beer, wine and cocktails, hobbies, art supplies, and cooking lessons.
At the start, curated boxes essentially aggregated up-and-coming brands, items, and combinations that were believed to appeal to a niche audience. These boxes were then further personalized based on data from previous boxes, individual ratings, or whether or not the recipient reached out to purchase more of the same products.
Curated boxes like HelloFresh, which provide customers with ready-to-make entrees to avoid the grocery store experience altogether, thrive and use celebrity influencers and ambassadors for marketing their products to consumers.
Related reading: How to Use Influencer Strategies in Your Ecommerce Marketing
Over time, brands became savvy to this business model and began to take note. Why give all this customer data to an aggregator when a brand could offer its curated box and gather a loyal following that’s individual to themselves?
The Lauren Look by Ralph Lauren was born from this idea. This brand-led subscription offers the subscriber curated seasonal outfits to wear, return, or purchase and the ability to swap for a new look as needed. In return, Ralph Lauren enjoys recurring online revenue with greater predictability.
A curator subscription is a great opportunity for brands to transform a customer into a follower and equate themself with the lifestyle of the brand, not just a few pieces. If your products are already being packaged and sold in a curated subscription box, now is the time to launch your own subscription service. Take back your customer base, build loyalty, and gather data first-hand.
The Digital Content Subscription
Perhaps one of the most commonly adopted forms of subscription business models is the digital content subscription model. Almost everyone has a mixed combination of digital subscriptions, such as Netflix, Spotify, Amazon Prime, and Disney+.
Additionally, most consumers have moved their magazine and newspaper subscriptions to a digital format. The New York Times alone added 2.3 million digital-only subscriptions in 2020.
Beyond just streaming movies and reading magazines and newspapers online, consumers are also becoming accustomed to accessing classes through digital content subscriptions. From cooking to language to academic courses, people hop on and off Zoom calls all day, gathering experiences in a digital format.
With the wide accessibility of the internet and its brute force use over the last two years, digital brands have had the opportunity to increase customer loyalty and improve data collection directly from consumers by offering digital subscriptions for software, services, streaming, and hybrid classes and experiences.
Not only that, but by combining this with physical products and access to special members-only deals, the digital and physical worlds are being blended, allowing customers to enjoy the best of both, with brands tapping into even more first-hand customer data.
America’s Test Kitchen is a great example of a once-physical subscription brand that has transformed its approach, blending its subscription model to include both digital and physical product offerings.
Think of the influence Netflix created with its Korean drama, Squid Games. As this record-breaking show streamed across the US, American consumers had a sudden interest in Korean culture, creating a world of possibilities for combining that increased interest with pop culture curated subscriptions of physical goods.
The personalization possibilities of digital content subscriptions paired with physical products can become highly sophisticated. By tapping into this ecommerce analytics model, brands have a chance to create an appealing subscription for niche markets.
Related Reading: What is a Phygital Experience? 6 Real-world Examples
The Services Subscription
Service-based subscriptions are similar to digital content subscriptions. These subscriptions are based on users who visit a service regularly — for example, the mail service DotDigital or the stats services Statista.
This subscription model often allows users to access a service via a pay-as-you-use model, allowing users to have flexibility in pricing based on scale. For example, someone who needs to pull data from Statista regularly might opt for the website’s monthly subscription fee. This subscription model allows a single user access to all statistics and data sets. However, Statista also offers a project subscription, which is a good fit for a company that only needs access to data for a limited period of time but needs to offer that access to multiple users.
Service subscriptions offer brands similar benefits to other subscription models in that they allow for increased insights into customer data while also ensuring a more predictable revenue stream. This subscription model is a good fit for businesses that offer web-based solutions that may once have been a software purchase.
Creative and Miscellaneous Subscription Examples
With subscription models taking on so many forms, it begs the question: what’s next?
Throughout the evolution of the subscription model, savvy brands have been at the forefront of designing new hybrid models, and the continuing possibilities are endless.
Uber Pass is one example of a creative application of the subscription model. In this case, users pay a premium fee — monthly or annually — to Uber that can cover the cost of rides, food or goods delivery, or ride services. It also gives users discounts and access to premium features, such as expedited delivery.
For American Express users, Uber and AMEX created another layer to the subscription model, offering added incentives to encourage all users to sign up for Uber Pass and tie their AMEX card to their Uber account. This, in turn, provided these users with bonus discounts and benefits.
In 2020, thinking outside of the subscription box, Nissan launched a cutting-edge car subscription service that allowed a customer to subscribe to a $700 monthly fee to essentially have the ability to drive a new Nissan as often as they wanted. Other car companies were soon to follow with subscription models of their own, including Porsche, Volvo, and Mercedes.
Test Out Subscription Services With Vaimo
The creative application of subscription model ecommerce is changing the way we interact with brands and the shopping experience altogether. These models are constantly evolving and what will be hot next is up to you. Tap into an existing subscription model, create a hybrid of multiple models, or create something entirely new.
If your brand is interested in testing out the ecommerce subscription model waters, we are here to help. At Vaimo, we help brands look for creative ways to market their products and services in a way that leads to long-term brand loyalty and increases customer insights. Talk to our team today about how your brand could become another subscription success.