Apple Seeds the Subscription Economy

January 30, 2019

As super-retailers join the subscription game, relationship commerce is more important than ever

Apple Seeds the Subscription Economy

Earlier this week, Cheddar revealed that Apple is planning to roll out a subscription-based gaming service, like a Netflix of video games. This is a significant move for the mega-retailer, which is looking to subscription services as its hardware sales have plateaued.

Apple is reportedly looking into partners that would help boost the subscriber base for Apple Music, and the tech giant is also creating original TV and video content for a new streaming platform, again à la Netflix. But wait, there’s more — Apple plans to add premium channel subscriptions to Apple TV as well, and they’re not stopping at audio and video. Apple bought a magazine subscription platform that is set to debut in the spring, giving it the foundation to monopolize the media subscription space.

Subscription services have historically been associated with small and mid-range retailers like Birchbox and Hello Fresh, but as giants like Apple, Amazon, and Walmart have come to learn the value of subscription services, the consequences for smaller, existing sub-based retailers could be significant.

Take Stitch Fix, for example. Valued at approximately $2 billion, the clothing box subscription retailer remains one of the most successful mid-range subscription-based companies out there, but it hardly has the resources that a mega company like Amazon boasts. Since the introduction of Amazon’s Prime Wardrobe subscription clothing service, companies like Stitch Fix are now competing in the same sphere. Stitch Fix is clinging tight to the factors that company leaders believe set it apart, like the personalization of wardrobe boxes and surprise factor of their delivery system.

Stitch Fix CEO Katarina Lake is optimistic that because the company’s value proposition differs from Amazon’s, Prime Wardrobe won’t run them into the ground just yet.

It’ll be up to the Stitch Fixes and BirchBoxes of the world to home in on what makes their product unique and worth it for customers to remain loyal when cheaper, potentially more convenient options crop up.

Apple’s product loyalty and Amazon’s monopoly give them some good legs to stand on when it comes to entering the subscription world. Too many companies try to sell a subscription based on the novelty of the service alone, without having a strong product or consumer relationship commerce fundamentals to back it up.

It’ll be up to the Stitch Fixes and BirchBoxes of the world to home in on what makes their product unique and worth it for customers to remain loyal when cheaper, potentially more convenient options crop up. Quality, style, and personalization are in independent companies’ favor, as is their ability to engage more closely with their customers on social media and earning customers’ loyalty through relationship commerce.

In a world in which 65% of retailers offer subscription services and 22% of those who don’t plan to start one this year, customers will have plenty of choices when it comes to which plan to choose. Even the biggest fish in the B2C retail sea are noticing the benefit of recurring revenue and enticing their customers to stay with the subscription packages their consumers want.

Tags: subscription commerce, News, Retail

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