These days, there are few one-size-fits-all approaches for success. But across all businesses, subscriptions are a strong move. No matter if you operate in beauty and wellness, food and beverage, or even entertainment, a subscription model can rapidly scale your business. When you have the guarantee of ongoing orders, you can increase lifetime value, lean into creative journeys, and most importantly, build a brand that's based on relational commerce.
Relational vs. Transactional Commerce
Transactional commerce refers to how shopping is typically done — a customer buys an item and the journey ends there. The exchange is focused on just the profit, and neglects to fortify and focus on the other meaningful aspects of ecommerce. With subscriptions, you have ongoing opportunities to engage with your customers. Regularly scheduled product shipments, notifications for upcoming orders, personalized content, even options to pause a delivery — all of these are touchpoints for speaking to your customer and strengthening the relationship. Over time, your products and brand become so seamlessly integrated into customers’ lives, they move beyond “things” and become staples.
In Recharge’s State of Subscription Commerce Report, we found that among Recharge merchants in 2020, subscribers grew 91%, and average order value (AOV) was up across the majority of verticals. That said, different subscription models make more sense for certain businesses. Let’s break down the three types so you can move forward with the best option for your business.
Think of your favorite coffee, the toothpaste you use, or delicious energy bars. With replenishment subscriptions, products are “replenished” through shipments on a regular cadence. People can “subscribe and save,” often getting discounts when they sign up for the service.
In our State of Subscription Commerce Report, 32% of subscription merchants chose this model. This subscription model works well for beauty and wellness brands, like Native. When customers sign up with Native, they choose a schedule that suits them and then enjoy 17% off orders on deodorant. This model also works great for food and beverage. Another example is Oatly, a Swedish company that makes milk, ice cream, and yogurt from oats. With Recharge, Oatly offers customers subscriptions to regularly receive their favorite products.
Imagine getting a box delivered full of secret items — brand new beauty products or snack items to try. In curation subscriptions, merchants assemble a box, usually centered around a theme or product group, and ship them to customers. These boxes are diverse, with the products switching up every month. This model taps into buyer psychology to surprise and delight customers with unique products. Merchants are able to create large subscriber bases because of the convenience and excitement their boxes bring. In our report, 55% of merchants chose this subscription model.
This model works well for home goods, food and beverage, and beauty and wellness, among other verticals. Bokksu curates boxes of authentic Japanese snacks so customers can experience new candies, teas, and flavors. With Shaker and Spoon, customers receive monthly boxes with spirits to make different cocktails. Decorated makes home decor boxes for seasonal home refreshes. Really, the possibilities are endless — you can assemble different products for games, personal care items, or clothing.
Chances are you have an access subscription. Spotify, Netflix, Amazon Prime — all of these are access subscriptions. Customers pay to use a service, whether it’s for a program, free shipping, or gated content. This is the fastest-growing subscription model, comprising 13% of the market. Most commonly used to offer membership or gate availability, this model is growing because of the wide variety of benefits merchants can offer their subscribers.
Even if you make products, you can still use an access subscription. For example, Crossrope sells jump ropes, but they also offer interactive fitness classes for subscribers.
No matter your business type, a subscription model can leverage your product offerings and elevate your brand. Subscriptions help reduce churn, increase revenue, and lead towards sustainable growth. If you’re looking to set your brand up for success, explore more resources and solutions with Recharge.
This article was contributed by Americaneagle.com partner, Recharge.