According to an eConsultancy article, the following are the advantages of subscription services for eCommerce.
Lower retention spend
Once customers subscribe they will automatically be receiving products from you each month, without the need for you to pull them back to your online store through marketing and advertising efforts, which means your retention spend decreases.
Subscriptions enable you to have a much better idea of how much stock is needed, how much you will spend on shipping costs, the range of your delivery locations, what your warehouse staff will require, the profit you’re likely to make in the future, and more.
Faster feedback period
When a customer only orders from you twice a year, it generally takes you a longer timeframe to understand what the problem, if any, could be before you can think of a solution. However, if customers order from you every month, they will make you aware of any issues they may have, allowing you to solve problems quicker and in turn design a better product that may not only attract more consumers,but it also means you keep your existing customers around for longer.
Types of subscription models:
Before you adopt subscription services into your eCommerce business, it’s important to note that there are two principal types of subscription in eCommerce - namely recurring orders and curated collections.
With recurring orders, customers subscribe to receive the same order at regular time periods. The customer is generally incentivized to take up the subscription because of a special price. This may be in the form of offering customers a specific discount percentage and free shipping when customers commit to the subscription. As customers subscribe to more offers, their overall discount increases.
The benefit for customers is simply more savings and convenience. They can save a considerable amount of money on purchases they would likely purchase on a regular basis anyway, and to sign up for a recurring delivery with a one-time online payment is more convenient than to continuously purchase those items as they deplete.
With a curated subscription a customer accepts the offer to receive a collection of products around within a similar category. Online stores generally offer subscriptions of varying time frames, with a lower cost-per-month over longer periods.
In contrast to recurring orders, with curated subscriptions savings are generally not the main driver. Instead, product discovery is the main pulling factor. For customers who don’t have time to browse through different stores, it’s a delight to discover new products they might not have time to search for.
Another distinct factor with this subscription model is it integrates automation with old-fashioned feedback to make the subscription personalized for each customer. Several eCommerce businesses that offer curated subscriptions rely on automated record-keeping, feedback from customers, and preferences collected through surveys to customize future orders.
Subscription-based eCommerce models benefit both shoppers and eCommerce businesses. As consumers get a better understanding of subscriptions, it only makes sense for you to consider how you can integrate this proven business model into your online store.