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3 Types of eCommerce Subscription Business Model [Comparison]

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Ecommerce subscription business model
The subscription business model has seen an unprecedented degree of adoption in the last two years. While companies such as Netflix, Spotify, and Amazon have long been known to run with this model, eCommerce businesses have also joined the fray. Businesses such as Peloton, Amazon Subscribe and Save, Dollar Shave Club, and even Rihanna’s Savage X Fenty are presently turning over massive profits due to opting for a subscription-based eCommerce model.

Since the pandemic, most individuals are beginning to prioritize flexibility and convenience, and the signs are glaring that subscriptions may just be the future of eCommerce. A survey conducted by McKinsey and Company, one of the world’s largest management and consulting firms, has shown that about 15% of people who buy products and services online can boast of signing up for at least one or more subscription packages. With this in mind, we would like to give you a brief overview of some of the widely used subscription models for eCommerce businesses and their benefits for both retailers and customers.

The Curation Model

In this digital age where there is no shortage of products and services, customers can sometimes face the challenge of analysis paralysis. Often, users scroll through a website with a plethora of options and end up not buying anything because they couldn’t decide what to choose. With the curation model, however, eCommerce retailers can solve this problem by offering users the opportunity to subscribe and enjoy access to products and services filtered based on their preferences.

At some level, many businesses are taking advantage of personalization to fine-tune the user experience on their online platform, and the curation model enables retailers to connect with their customers on a more intimate scale.

StitchFix is a perfect example of an eCommerce company that has successfully implemented this strategy. This US-based styling service uses algorithms and AI technology to choose clothes for customers and deliver them straight to their doorstep. StitchFix has generated over $1billion in sales revenue and has a customer base of over 3million users worldwide.

Adopting the curation model enables businesses to convert visitors into buyers and buyers into regular customers. It eliminates the mental effort of making a hard choice and simplifies the purchase process for customers. Also, users are more likely to try out new products or services when presented in a personalized offering rather than as another option in a list of random items.

The curation model has helped several businesses generate tons of revenue and proven an excellent strategy for building a thriving eCommerce company in the present-day market.

The replenishment model

Rather than monitor their supplies and keep track of when they would need to place an order for new deliveries, the replenishment model allows you to make things simpler for your customers through automation. Businesses that run a replenishment model subscription service provide subscribers with a steady supply of a particular product at fixed intervals. Although not yet as popular as the curation model, the replenishment model is gaining much ground across several eCommerce retailers, particularly in the health and wellness and cosmetic industries.

A viral example of a business operating this method is Hello Bello which provides plant-based baby products such as diapers, lotions, oils, and more. The company runs a subscription package where customers can have diapers delivered monthly. This helps their customers save time and provides some much-needed convenience.

Thanks to the replenishment model, customers no longer need to worry about running out of stock with their essential products. All they need is to ensure that their subscriptions remain active and leave the rest to their retailer. Adopting a replenishment model takes away much of the uncertainty associated with a traditional eCommerce business by guaranteeing a consistent cash flow. Rather than hope customers would patronize your product, you would be establishing a defined number of people who are guaranteed to receive the items you have on sale. The replenishment model also allows retailers to keep track of their inventory with relative ease and promotes smoother running of the business’ operations.

The access model

Everyone values exclusivity – being one amongst a privileged few to have access to unique offers, products, discounts, and more, and this is what the access model delivers. This strategy is pervasive in the digital subscription space and has shown to be very effective in attracting and retaining customers. Using the access model, eCommerce companies allow customers to pay a fixed amount periodically to qualify to receive specific incentives reserved for only members.

EightSleep, situated in New York, is a company focused on improving people’s sleep by selling products such as mattresses and pillows that enhance an individual’s sleep quality. They provide a mobile app where subscribers have access to a feature where they can analyze every night’s sleep. For customers, the offers like these give a feeling of worth and value. This sense of appreciation then leads to a higher level of customer loyalty and retention.

Conclusion

You can take your eCommerce business to the next level simply by modifying your services to include one of these subscription models. Fortunately, incorporating any of these models seamlessly into your current business structure can be done very easily with WooCommerce. We have helped several eCommerce retailers scale up their revenue and increase their customer base through WooCommerce subscriptions, and we would like to help you do the same as well. So contact us  today and have your WooCommerce website ready and launched in the shortest time possible.