It seems these days that every business is at least considering a subscription model. Whether the company sells razors, clothing and fashion accessories, cosmetics, wine or something else, they are signing people up left and right. This trend among online retailers has even extended to some companies that are primarily brick-and-mortar retailers, notably Target. Target's subscription-based ecommerce solution started in 2013. The subscription trend will likely continue, because many companies now know that customers are interested.
Why it works
Subscription-based retailers are experiencing great success due to the following reasons:
- Easy to calculate revenue
Compared with other business models, it's easy to determine how much revenue a subscription-based company is bringing in. Of course there are always going to be fluctuations but compared to other business models subscriptions are much easier to handle.
- Simplified process of identifying buyers
In order to be successful, most subscription-based retailers have to narrow their focus. This means they won't waste money targeting the wrong people.
- Easy purchase process
The purchase process couldn't be easier. People can sign up online, make an online payments and then wait for the products to arrive.
- Consistent contact with the consumer
From the moment someone subscribes, the business has a good reason to contact the customer. This can be used for customer satisfaction and the sale of new product.
- Get customers what they want now, but make them wait
In many cases subscribers have access to new products before other people, but they still have to wait for them to arrive in the mail. This anticipation keeps them interested.
Will it continue?
The big question everyone has is if the success that subscription-based retailers have experienced recently will continue as time goes on. Many think it will. According to Tim Ray, CEO and founder of Carnivore Club, a subscription-based retailer for curated and cured meats, the subscription business model isn't a new one. "The business case for successful subscription boxes pre-dates the Internet by several decades … What we are witnessing is an explosion in popularity for new innovative marketing and offerings on an old business model that has been very successful for a long time."
In addition to Tim Ray, The Future of Commerce says that while the subscription business model will experience some changes, it will most likely stick around. Although many people see the promise in subscription-based businesses, there is some room for concern. Businesses who can continue to innovate and set themselves apart will be fine, but there is always the concern that somewhere down the road people will get tired of subscriptions and cancel the ones they have.
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