The Rise of Subscription Based Ecommerce

By Paul Doherty Ecommerce No Comments on The Rise of Subscription Based Ecommerce

makeup subscription

Subscription based models are the next evolution of online ecommerce and benefit both businesses and consumers. Businesses are aided from a more predictable income stream whilst shoppers are provided with a more flexible approach to how they purchase and receive their favourite products and services.

 

With such easy access to the internet and as smartphones pull away from laptops to become the most important device used to access the internet, the entire process of how consumers buy products and services has become faster, smoother and simpler. We’ve reached a point at which shoppers are able to buy absolutely anything they want, anywhere they want, and are able to do so 24 hours a day, 7 days a week. However, the shopping evolution hasn’t stopped and continues to take place with the rise of subscription based ecommerce.

What actually is subscription based ecommerce?

Handy ‘sign-up’ services have been around for quite some time in one form or another, but they are slowly on the rise online. At some point in life, most of us have paid to subscribe to at least one type of subscription based service. Everything from newspaper and magazine subscriptions, through to gym membership fees and more.

The average Brit spends £60 per year

on subscription services, with Brits spending

more than £2 billion every year on subscription services.

Subscriptions have traditionally provided consumers with the ability to gain access to something, be it a product, service or venue, by paying a regular fee (which could be weekly, monthly, annually etc.). However, the way the ecommerce and retail world has developed subscriptions in recent years, this practise has evolved.

It’s the time of non-traditional subscriptions

Typically, online subscriptions have been closely associated with publications. PureNet launched the magazine subscription platform buysubscriptions.com for Immediate Media in 2015 which was awarded Ecommerce Campaign of the Year at the PPA Customer Direct Awards.

However, it’s safe to say that subscription-based business models, in recent years, have seen a surge in even more areas, and have contributed to further evolving the world of retail and ecommerce. It has become a model that’s no longer only closely-associated with publications.

For example, PureNet works with Jane Plan -an award winning subscription based diet plan which helps with weigh loss by providing perfectly balanced and portioned meals directly to your door.

 

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In the digital realm, streaming services have become one of the most popular ways with which we consume media such as TV shows, movies, music and games. These have been around for a lot longer than just the last 12 months, but services such as Netflix, Spotify and Amazon Prime Video have become household names when it comes to watching and listening to our favourite entertainment.

It’s easy to see why services such as these became so popular though. There’s a whole world of media waiting to be discovered that millions of us may never have even known about if it wasn’t for the diverse collection made available through streaming platforms. Plus, they provide all of the benefits that made internet shopping so popular, as well as the obvious plus of being able to enjoy the things we want from the comfort of our own homes. No queues, no tickets, and no space-eating hard copies filling up every spare shelf in the house. The icing on the cake is the affordable pricing structure. Being able to pay a reasonable monthly fee for such a vast collection is an extremely exciting concept for many of us.

That combination of convenience, choice, quality and value made a huge impact on the success of these platforms, and that formula is now being applied to a whole host of different industries and showing very similar results. Subscription services have essentially become an industry themselves, with websites dedicated purely to providing a one-stop shop for all things subscription. And that industry is one that boasts a huge amount of flexibility.

There’s a subscription for everyone

Honestly, no matter what you’re looking for, chances are you’ll likely be able to find a subscription service for it. From the aforementioned media and a wide range of gaming services, to cosmetics, survival gear, underwear, and even most of your weekly food shop. You can sign up for a subscription service to provide you with whatever it is you need on a regular basis without ever really having to think too much about it. And that’s one of the key contributors to the success of subscriptions. Their ability to streamline our lives, such as how you can subscribe for automatic recurring deliveries of many products from Amazon with just a couple of clicks, has made obtaining the things we use much, much easier.

It’s not just the products and services we use on a daily basis either. Boxes and ‘crates’ filled with goodies surrounding almost any hobby you can think of have become increasingly popular over time. The sheer amount of these types of boxes available today is staggering, with a lot more than just one option to account for the interests of people the world over.

The subscription box market is estimated to

grow by 77% to be worth over £1 billion by 2022

(which is almost double the 2017 figure of £0.573 billion).

Software has also found success in the subscription world too. Leading developers have adapted their products to suit a subscription model instead of a one-time purchase model, providing access to previously expensive programs at a much more manageable rate. The model has been adopted by the likes of Adobe and Avid for their entire suites of industry-standard tools, providing either contractual or rolling subscription plans that can even be cancelled or adjusted at any time to suit the needs of consumers. Some other platforms have also started to offer ‘rent-to-own’ solutions that work in a similar fashion, providing a subscription-based way to obtain expensive software without having to resort to credit or large sums of money.

These are just the tiniest fraction of subscription examples available today, there are countless options available for almost anything you can think of. But aside from the aforementioned convenience of a complete end-to-end shopping experience, what other factors have contributed to the popularity of subscriptions today?

Perceivably lower up-front costs and much better accessibility

As we mentioned before, many previously high-value products and services have now become much more accessible to the public thanks to subscriptions. This is clearly evident in the software examples. Being able to access these industry-standard programs and tools without having to shell out a sizeable sum of money in one go has expanded the available customer base for many businesses. Not only that, but it has benefitted consumers themselves due to their ability to make use of powerful products in order to further their career/hobby aspirations and goals.

You’ll also find services that now allow you to remotely access extremely high-spec hardware (such as PCs) remotely. High-spec hardware and technology is renowned for its often-substantial price, but with an affordable subscription-based way with which to access them, people are able to fulfil their needs with ease. There are even services such as Nuraphone who provide consumers with an innovative, high-quality pair of headphones that only work whilst a subscription is active. The company also offers a more direct purchase option without the need for a subscription, but the much lower monthly payments provide access to a quality product and experience without the hefty up-front cost.

A personalised, premium experience

Many subscription-based business models revolve around multiple access levels. This is utilised to provide different levels of features and flexibility from different services, or to tailor the contents of particular boxes for example. This personalised approach provides consumers with multiple options based on their needs, affordability and desires, so that what they continue to receive is relevant and important to them.

Some platforms have taken personalisation even further, such as some fashion subscriptions that offer a ‘personal stylist’-type experience to truly tailor what their customers receive. This also helps to enhance the overall convenience of each subscription, often removing some of the steps that would normally be required for more traditional shopping habits.

More often than not, subscriptions offer premium-grade products at affordable prices too. This sense of a luxurious, hand-selected collection enhances the personalised feel combined with an air of true quality. That boutique, tailored feel of many subscriptions certainly adds to their attraction, and provides a solid way to enhance relationships between businesses and their customers.

The removal of frustration

A subscription to one of the many digital meditation platforms may help to alleviate stress in a variety of areas, but that’s not the frustration we’re talking about. One of the ways that many subscriptions have removed the inconvenience of conventional consumption methods, is the paid removal of advertising. Spotify Premium alongside most of the big-name streaming platforms offer an ad-free service in return for payment. Adverts have long held a reputation for ‘getting in the way’ of what people are watching or listening to, and being able to do away with them has proven to be extremely successful for these services.

Their on-demand nature has also allowed people to escape the need to wait for what they want to receive. Being able to access the media that consumers want whenever they want has become normality, often reducing people’s use of traditional consumption methods entirely. This has also stretched to physical products, such as with Amazon’s Prime service that offers precise, rapid delivery options across a vast range of items, and even same-day delivery on some products.

A recent survey suggests that over 60% of adults in Britain are subscribed to the Amazon Prime subscription service.

Subscriptions benefit retailers as well as consumers

The rise in subscription popularity has not only adjusted the way that consumers purchase, but it’s also transforming the entire landscape of retail and ecommerce in a positive way. Many subscription providers, both existing and new, are finding fresh and exciting ways with which to make their services and products more appealing and unique. This in itself has become a benefit of subscription models, and the way in which these subscriptions are implemented is helping to generate interest across a much wider customer base. The accessible nature of subscriptions is opening up a whole world of opportunities and benefits for retailers and businesses.

  • Products and services have a tendency to improve, whilst unique offerings help to diminish the effects of competition – with the desire to remain unique and attractive to consumers, subscription-based businesses are constantly looking for ways that they can stand out. This often means dramatic improvements on the quality of products and services on offer. Ad-free entertainment streaming and mobile gaming in particular has found this to be a powerful way to aid success, resulting in new, better, and more original ways to experience their offerings as well as the constant innovation surrounding the personalisation and exploration capabilities of each platform. Also, subscriptions that provide consistent quality products and services experience less hassle when it comes to battling with the competition to gain customer loyalty for repeat purchases as the business model itself ensures further purchases automatically (providing that customers don’t lose interest).
  • More intuitive forecasting and inventory control – with subscriptions, businesses have a much clearer idea of when and where their income is coming from month to month as opposed to the often-dramatic fluctuations in regular ecommerce environments. This semi-guaranteed revenue helps with all aspects of the business, and can really aid the calculation of costs and stock requirements.
  • Strong relationships between consumers and businesses – subscriptions often result in more consistent communication between customers and the business in question. In traditional ecommerce environments, dissatisfaction often results in large refunds and hesitation to ever buy from a particular area again. However, subscriptions have a tendency to offer some form of negotiation and flexibility surrounding problematic situations. For example, a streaming service may offer a free month or two to a dissatisfied customer but still retain that customer’s subscription prior to those periods. The overall loss is much smaller, and the customer is still able to make use of an extensive platform that they may be more hesitant to give up on over time. The personalised aspect of subscriptions also helps to dramatically improve relationships and engage with consumers on a much more personal level going forwards.

It’s safe to say that subscriptions really work

With a whole host of benefits on both sides of the metaphorical subscription coin, it’s pretty easy to understand how the model has become such a key aspect of modern business. It’s also a concept that shows no sign of slowing down whatsoever.  If you would like to discuss how your ecommerce platform could be transformed into a subscription based service, then contact PureNet today!

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