How eCommerce Subscription Works

11 December 2023

This blog will explain how subscriptions works in eCommerce as this is a booming market these days, and definitely worth exploring. Why should you look into this I hear you ask, I will provide some quick stats to give you some food for thought that it is a growing trend that can be prosperous!

The UK spends up to £20 billion per year on subscription services with nearly 80% of adults are signed up for at least one subscription. Don’t forget this does include things such as Amazon, Spotify and Netflix.

However, it also covers more business to customer services where something has to be physically shipped out from the warehouse direct to the homes of the consumers. This can be anything from food, Lego, video games, and books as well as many more genres.

The average brit spends up-to £500 a year on subscriptions per year generating an estimated market value by 2025 of up to £1.8 billion, so why not get involved? how ecommerce subscriptions work

What is subscription eCommerce fulfilment?

A subscription business model generates cash from repeat business as customers pay a regular fee over a duration of time week, month or year, for recurring products or services for them to use.

What is key to getting customers signed up to subscription packages as it’s pretty much guarantees repeat business and builds customer retention as well generating revenue for your business at the same time.

There are two main types of subscription commerce: Convenience and discovery.

What’s the difference between convenience and discovery subscriptions?

Convenience commerce involves receiving the same products automatically on a repeat purchase basis. This model is ideal for customers who want to receive a product or service regularly without having to reorder it every time. Examples of convenience commerce include subscription services for household items, pet food, and personal care products.

Discovery commerce helps consumers discover and sample new products they might not have otherwise known about. This model is ideal for customers who enjoy trying new products and services. Examples of discovery commerce include subscription boxes for beauty products, video games, and books. how ecommerce subscriptions work

Why is subscription so popular?

Due to people’s busy lifestyles in this day in age, there has been an increasing demand for subscription boxes and this is mainly down to convenience for the consumer.

Health & Beauty products prove to be successful in this sector as things such as vitamins, protein shakes, and skin cream as these are used a lot through out a month by many people which then means they need a top up by the following month.

Customers love the fact their products are going to arrive on time each week/month without them having to worry about adding it to their shopping list when they go to the supermarket. In fact, a lot of things are sold online which cannot be found in shops so this gives it even more reason for consumers to subscribe.
So why is this an ever-growing market and what makes customers spend on a regular basis on things that they may or may not use?

Living a digital world has certainly helped this sector as it is easier than ever to buy online and subscribe for new services at the same time. If you’re thinking of selling your goods as a subscription box it is important to have great images with sound information on your professional easy to use website. Remember having autofill payment forms reduces time and increases changes of a purchase being made by the consumer.

Help the consumer make a choice

There can be too many choices out there from time to time which can cause indecisiveness and prevent a sale from happening as people are unsure. Consumers can take time to weigh up their options before taking the leap of faith of making the purchase and this can be a problem for some businesses.

Once you have decided on what it is you want to sell the best advice is to have a handful for subscription boxes rather than dozens as this does make the decision easier for the potential buyer. If your products are unique, they will make you stand out from the crowd as you will have less competition to face for more popular items and should increase chances of increasing sales. This will also reduce the chances of issuing refunds if the customer has had a change of heart as they’ve seen it elsewhere. how ecommerce subscriptions work

The power of the unexpected

People are generally creatures of habit in life but there is something special and a demand out there for providing the unexpected from time to time.

There is a great number of subscribers who go for a certain genre that is a surprise as it creates a sense of adventure and excitement so many providers of subscription boxes supply this service. This range is quite big but things like skin care, food, pet products & food are usually the things offered within the element of surprise.
Keeping the customer engaged is key so providing little hidden gems that are of good quality ensures repeat business.

Branding & Personalisation

Offering branded packaging and the opportunity to personalise their items each month keeps things fresh. This can be done in a lot of different ways from having people’s names on the items or even popular music bands or football teams, it all depends on what the customer requests. Using strong branding and nicely designed boxes creates a better experience from the moment the customer receives the goods to when they have to unbox it to see what’s inside. This guarantees a lasting impression and can leave a positive impact from design alone.

Give some consideration in to the outer packaging presentation, as we all know first impressions count. Other things to consider are the messaging, the size, type of material on the box are all key components in ensuring the presentation it is well received by the consumer. how ecommerce subscriptions work

Benefits of running a service for subscription boxes

Subscription box services enjoy high retention rates as well as high income revenue streams, if you’re successful! There are several things to consider, such as the genre you wish to target, what products you wish to sell as well as a pricing strategy. This is a lucrative business if you plan, sell quality products, and invest in your marketing.

Let’s not forget subscription boxes are becoming increasingly popular due to their convenience, customisation, and cost-effectiveness so now is the time to start!

Pros of subscription service

Convenience: Subscription boxes are delivered to your door, this saves time and effort and getting your hair wet having to go the shops in the rain.
Customisation: Subscription boxes can be tailored made with specifics for individuals making it feel more personal to the recipient.
Cost-effectiveness: Subscription boxes offer can save money as many items are usually contained in the package and work out less than buying individual items.
Fun and new products: Subscription boxes can give you things you’re not expecting and that you’ve never thought of purchasing before, but you love once you try it.

The above 4 points tend to give your business increased customer longevity as they’re engaged in the products you’re sending them. This gives repeat business as opposed to a one-off purchase being made. It is also a good way of generating new custom via word of mouth from existing clientele recommending your products and services to others to explore. how ecommerce subscriptions work

Negatives about Subscription Boxes

Like anything in life not everything is perfect you have good and bad to consider. However, if you get it right the pro’s certainly outweighs to cons but we would like to bring a list of cons to your attention.

Uncertainty – From time to time you may get customers claiming to forget to cancel their subscriptions if they are not a fan of the product or financial circumstances have changed. This could lead to loss of revenue and potentially loss of customer trust as well as less recommendations for your products.
Stagnation – If the box isn’t closely tailored to the consumer’s requirements which may lead to them to drop out of the service, it can be difficult to bring customers back once you lose them. Some subscription box services don’t seem to aim for as much variation as others, so a customer looking for brand new products every month might be disappointed by what they receive
Cost: Running a subscription box service requires thorough planning and investment. Some contingencies must be factored in for new signups, late payments, renewals, and cancellations.

Customers should carefully consider the cons of subscription boxes before subscribing to one. Ultimately, the decision to subscribe to a subscription box depends on your personal preferences, budget, and lifestyle and this is why businesses need to always give the customer what they need.

Less encouragement required when quality products are sold

Back to some more positives when selling subscription boxes again now. Well in this game customers generally need less encouragement to make further purchases as they’ve committed to subscribing for a certain amount of time usually 6 to 12 months and have planned to pay in advance for products and services.

Usually, eCommerce businesses use things like discount codes, email campaigns or offering money off on a regular basis to try and encourage more sales, subscription companies don’t have to worry about these type marketing ploys as they get repeat business every month. how ecommerce subscriptions work

Reliable Revenue Stream

Once you’re up and running and generate a good following the rest should fall into place especially if you charge a set amount for the boxes.

This should be easier to forecast turnover and manage your finances properly as it can usually mean customer pay the same amount on the same day each month as opposed of not knowing what will be sold on a day-to-day basis.

If you plan what the spend will be per box each month in advance than you can work out a cost per unit (box) in advance. This will allow you to then work out what your profit margins will look like not just on a month-by-month basis but quarterly, 6 monthly or yearly.

What’s driving increased demand for subscription boxes

There are a few reasons for this as many more businesses are looking to shift towards operating on these services as mentioned above there are a lot of benefits if you get it right!

The three main factors to invest in this model are Predictability, Recurring Revenue and Customer insight.

Getting customer feedback is one of the most powerful tools you can have as a business so building consistent relationships means feedback is often open and honest. This can help you make informed decisions on what’s going well and not so well allowing you to understand what improvements are needed to grow your brand further. how ecommerce subscriptions work

Subscription box fulfilment

MCF have vast experience in providing excellent services in providing subscription boxes of the highest quality for your customers to enjoy.

We have been doing this for many years now and seen a big demand for our services over the last 12 months as we know what is required to do thing accurately and to keep happy engaged customers to ensure you get repeat business time after time.

If you want to understand how we can help you grow your brand in this sector then get in touch today and one of our highly trained staff members will go through exactly what you need to know.

Click here to get in touch.