4 popular types of e-commerce subscriptions
The subscription economy has spread its wings into just about any industry you can imagine. Online retailers are using the subscription model to tap into a shift in how consumers think about the relationships they have with the businesses they use. According to this study from 2018, the subscription e-commerce market has grown significantly since 2014.
Subscription e-commerce sales in the billions via Fuel.
This trend is expected to continue as subscriptions make their way into additional industries and markets. Here are four industries where subscriptions have taken hold in the past five years.
The entertainment industry is one of the first things that come to mind when thinking about successful subscriptions. Content streaming services like Netflix, Hulu, Disney+, and Spotify dominate the market and act as the model for tons of new startups.
Many followed Netflix after it pivoted from a DVD-rental service to a streaming content platform in an effort to double down on the existing relationships with its customers. While Netflix has made some tradeoffs along the way, it owns the position of one of the first streaming platforms to capitalize on the subscription model.
Commodity goods subscriptions
When Dollar Shave Club started its monthly razor subscription, it shook the commodity goods market to the core. In an industry that typically has a lack of pricing power, DSC was able to take on established brands like Gillette by monetizing the customer relationship online.
The subscription model helped DSC and others, like Harry’s, Billie, and Quip, subvert the established model in the market and capitalize on the sustainability of these relationships by helping them build a predictable stream of revenue.
E-commerce subscription boxes
Whether it’s Stitch Fix’s personalized outfits, Birchbox’s customized beauty products, or Blue Bottle’s single-origin coffee, you can get a box of pretty much anything you want shipped to your house every month. The rise of these e-commerce subscription box services came in the wake of Netflix’s and Spotify’s success by offering personalized recommendations to their customers.
The reason these boxes work so well is that each platform relies on data and education to help their customers see the value in a recurring payment. It’s one of the truest forms of monetized relationships.
The technology and software market has seen the largest influx of subscription e-commerce in the past five years. Here at ProfitWell, we use the same model as the majority of the market to build stronger relationships with our customers, reduce churn, and boost monthly recurring revenue.
All of these examples showcase how the ongoing value provided by a company, whether it’s software services, clothing recommendations, or simply a new razor, keeps customers engaged with businesses longer. It’s one of the quickest and most effective ways to grow your company in just about any market.