The Rise of Subscriptions in the E-Commerce Market
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Jun 26 2018, 9:06 AM
The names of the most popular ecommerce subscription boxes are commonplace by now. We all know someone who gets something delivered in the form of a subscription package each month, whether it’s meal preparation ingredients, clothing, makeup, razors, pet supplies or something else.
It’s really no wonder people are eager to try an ecommerce model that boosts personalization and convenience. The rise of subscriptions in the ecommerce market is thanks in part to the appeal of being able to customize the types of products received—while still getting all the excitement of a surprise gift.
There’s no doubt the subscription ecommerce market is on the upswing. It’s grown over 100 percent each year for the past five years. In 2011, the top retailers were making $57 million from subscription-based online sales. By 2016, the figure had grown to over $2.6 billion. According to a survey from McKinsey & Company, “15 percent of online shoppers have subscribed to an ecommerce service over the past year.”
So, what makes subscription boxes successful? Here’s what merchants need to know in order to take advantage of this promising trend.
Subscription Boxes: The Basics
Subscription boxes are simply regular deliveries containing an assortment of products. The contents of the packages will depend on the offerings in your cloud ecommerce store and customer preference. The frequency can vary between several times a week and quarterly, although many brands offer weekly or monthly deliveries. Along with flexible order fulfillment options, it’s a good idea to offer several tiers of pricing so your subscription program is accessible to shoppers at all levels.
Subscription models, like any other mode of online selling, come with advantages and disadvantages. One major advantage is it presents the ability to more accurately forecast. Companies can predict volume and demand in advance, which helps streamline inventory and reduce waste. Similarly, it’s an excellent way to unload excess inventory following sales—provided the product in question is something consumers will truly appreciate finding on their doorsteps.
Another huge advantage of subscription ecommerce is the opportunity to develop a meaningful relationship with customers over time. It’s always preferable to develop a long-term relationship rather than depending on singular sales. In other words, subscription boxes can help you retain customers over time. If they like the products they receive and the customer service experience, they will engage in word-of-mouth marketing and perhaps even make additional purchases from your website.
The primary challenge associated with subscription boxes is curating a truly appealing combination of products. If customers feel they’re not getting their money’s worth, they will discontinue their subscriptions. If people feel they’ve “seen it all” from your subscription program, they will leave. This phenomenon is known as subscription fatigue.
The last big challenge is ensuring order fulfillment is consistent, with products arriving on time in perfect condition. When customers come to expect a certain delivery, it’s highly disappointing when something goes awry. So, companies must pay special attention to the delivery process for boxes.
The Unboxing Experience
The arrival of a subscription box signals one thing to customers: It’s time for an unboxing. This part of the process has even gained prominence online, with unboxing videos taking YouTube and social media channels by storm. A subscription box is more than a cardboard box containing a random assortment of items; it’s a chance to offer buyers a branded experience. Consider the presentation and materials. Is your subscription box truly one-of-a-kind? Are you including enough surprises to delight your customers?
Consumers seem to be responding well to subscription boxes across segments. Consider branching out and putting together a subscription-based program if your ecommerce company has yet to do so.
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The names of the most popular ecommerce subscription boxes are commonplace by now. We all know someone who gets something delivered in the form of a subscription package each month, whether it’s meal preparation ingredients, clothing, makeup, razors, pet supplies or something else.
It’s really no wonder people are eager to try an ecommerce model that boosts personalization and convenience. The rise of subscriptions in the ecommerce market is thanks in part to the appeal of being able to customize the types of products received—while still getting all the excitement of a surprise gift.
There’s no doubt the subscription ecommerce market is on the upswing. It’s grown over 100 percent each year for the past five years. In 2011, the top retailers were making $57 million from subscription-based online sales. By 2016, the figure had grown to over $2.6 billion. According to a survey from McKinsey & Company, “15 percent of online shoppers have subscribed to an ecommerce service over the past year.”
So, what makes subscription boxes successful? Here’s what merchants need to know in order to take advantage of this promising trend.
Subscription Boxes: The Basics
Subscription boxes are simply regular deliveries containing an assortment of products. The contents of the packages will depend on the offerings in your cloud ecommerce store and customer preference. The frequency can vary between several times a week and quarterly, although many brands offer weekly or monthly deliveries. Along with flexible order fulfillment options, it’s a good idea to offer several tiers of pricing so your subscription program is accessible to shoppers at all levels.
Subscription models, like any other mode of online selling, come with advantages and disadvantages. One major advantage is it presents the ability to more accurately forecast. Companies can predict volume and demand in advance, which helps streamline inventory and reduce waste. Similarly, it’s an excellent way to unload excess inventory following sales—provided the product in question is something consumers will truly appreciate finding on their doorsteps.
Another huge advantage of subscription ecommerce is the opportunity to develop a meaningful relationship with customers over time. It’s always preferable to develop a long-term relationship rather than depending on singular sales. In other words, subscription boxes can help you retain customers over time. If they like the products they receive and the customer service experience, they will engage in word-of-mouth marketing and perhaps even make additional purchases from your website.
The primary challenge associated with subscription boxes is curating a truly appealing combination of products. If customers feel they’re not getting their money’s worth, they will discontinue their subscriptions. If people feel they’ve “seen it all” from your subscription program, they will leave. This phenomenon is known as subscription fatigue.
The last big challenge is ensuring order fulfillment is consistent, with products arriving on time in perfect condition. When customers come to expect a certain delivery, it’s highly disappointing when something goes awry. So, companies must pay special attention to the delivery process for boxes.
The Unboxing Experience
The arrival of a subscription box signals one thing to customers: It’s time for an unboxing. This part of the process has even gained prominence online, with unboxing videos taking YouTube and social media channels by storm. A subscription box is more than a cardboard box containing a random assortment of items; it’s a chance to offer buyers a branded experience. Consider the presentation and materials. Is your subscription box truly one-of-a-kind? Are you including enough surprises to delight your customers?
Consumers seem to be responding well to subscription boxes across segments. Consider branching out and putting together a subscription-based program if your ecommerce company has yet to do so.
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