Subscription Models in E-commerce: Benefits, Challenges, and Best Practices

Subscription services are becoming a popular business model. Subscription services can be cheaper, more convenient, and personalized for your customers. A subscription-based business model sells a consumable product or one that requires repeat orders on a monthly or annual basis. Take instant streaming for example. Customers want to watch multiple movies over an extended amount of time. You want to make sure customers want continued service. If your business is ready for a subscription model, this is the time to investigate it.

Types of subscription services include convenience boxes, discovery boxes, and access boxes. Convenience boxes work best for disposable or sanitary items. Discovery boxes allow customers to explore a new hobby or niche product. Access boxes provide exclusive access to new video games or movies.

Benefits of Subscription Models

  • Reliable recurring revenue
    • Predictable cash flow
    • Customers for life
  • Increased customer loyalty
    • Build long term shopper relationships
    • Spend less time trying to acquire new customers
    • Create sense of community
  • Better customer retention
    • Build trust and loyalty in customers
    • Make subscription offerings flexible
  • Higher customer engagement
    • Customers will find value in your product or service
    • Encourage user-based content
  • Better inventory management
    • Reliable orders can make inventory management easier for your business
    • Reliable stream of revenue