Offering Ecommerce Subscription Services: Discovery vs. ConvenienceFebruary 5, 2014
Subscription-based commerce pre-dates ecommerce by decades, but that doesn’t mean you can’t combine the two into a successful business. More and more websites are adding subscription order services for their customers. The model may benefit your ecommerce site, but you first need to decide which type of subscription model to use. [more]
“Discovery-based” subscriptions aim to surprise and delight customers with new products in each delivery. Some examples include Barkbox (pet treats and toys), Jacked-in-a-Box (sports supplements) and the Fruit of the Month club (fruit). The discovery model is best for acquiring new customers. As customers receive packages with some products they like, they return to the company to purchase more of the items. It can also be a great way to market more of your product catalog and spread the word about the products you offer.
“Convenience-based” subscriptions aim to provide customers with certain products on a regular basis. Amazon’s “Subscribe and Save” program is perhaps the most well-known. By signing up to receive monthly deliveries of a certain cereal, brand of paper towels, etc., customers get a discounted rate on their order. Convenience subscriptions are growing in popularity because they are great for retaining customers, so they work best for established ecommerce brands. It’s a good example of the Pareto principle in action – 80% of your sales come from 20% of your customers. In that light, customer retention can be more important than customer acquisition.
The subscription model you choose will depend on the types of products your ecommerce site sells, and what your business goals are. In a future post, we’ll go over some tips to help your subscription service become successful.