Guide
Why Subscription Models Work
Everything you need to know about eCommerce’s fastest-growing business model
Brands of all sizes and across verticals are turning to eCommerce subscriptions to juice their bottom line and grow their business. In fact, the business model is so popular that experts predict the subscription eCommerce market will reach $478 billion by 2025.
Sub•scrip•tion-Based Rev•e•nue Mod•el
A subscription-based revenue model is a model in which a company provides ongoing products or services on a recurring basis in exchange for payment.
The most common types of subscriptions
Subscribe and save
A Subscribe and Save service — sometimes known as a replenishment or auto-ship service — provides regular, recurring delivery of a product to consumers.
Subscription boxes
Subscription boxes — also known as Membership Boxes and Curation Boxes — are subscriptions that seek to delight and thrill consumers by appealing to their sense of curiosity.
Membership
A membership subscription offers consumers access to the value an organization creates in exchange for a recurring fee.
Percentage of consumers by subscription type
Subscription boxes are the most popular type of subscription offering among shoppers.
Did you know? There are almost 7,000 subscription box companies in the world! 70% are located in the U.S.
Perspective
Consumers are loyal to products they love. Subscribe and Save services have high long-term subscription rates, compared to Subscription Boxes and Membership subscriptions — 45% of consumers subscribe to a replenishment service for at least one year.
Why shoppers use subscriptions
Shoppers cite the following as the main reasons they stick with subscriptions:
Did you know? 35% of active subscribers have 3 or more subscriptions.
Perspective
The No. 1 reason consumers sign up for a Subscribe and Save service is to save money.
Subscription stats every brand needs to know
Shoppers cite the following as the main reasons they stick with subscriptions:
Perspective
Brands flocked to subscription offerings in 2020. To stay ahead of the competition, brands must differentiate their subscription program by including promotional incentives.
Recommended Promotional Incentives
- Free shipping
- Early access to sales
- Subscription-only product offerings
- Best deal guarantee
Benefits of Subscription Offerings
Shoppers cite the following as the main reasons they stick with subscriptions:
Sources
- https://www.prnewswire.com/news-releases/global-subscription-e-commerce-market-is-expected-to-reach-us-478-bn-by-2025cagr-68-univdatos-market-insights-301115593.html
- https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/thinking-inside-the-subscription-box-new-research-on-ecommerce-consumers
- https://www.entrepreneur.com/article/313813
- https://www.gartner.com/smarterwithgartner/top-10-trends-in-digital-commerce
- https://www.ordergroove.com/retail-2020-recurring-revenue-delivers-results
- https://www.bain.com/insights/the-value-of-online-customer-loyalty-and-how-you-can-capture-it
- https://www.outboundengine.com/blog/customer-retention-marketing-vs-customer-acquisition-marketing
- https://www.invespcro.com/blog/customer-acquisition-retention
- https://www.salesforce.com/content/dam/web/en_us/www/documents/e-books/cpq/cfo_salesforce_cpq_ebook_revenue_models.pdf