The Beginner’s Guide to eCommerce Subscriptions
Start an eCommerce subscription business today

Kyle Beldoch
Strategic Client Director

Casey Burt
Director of Customer Success

Jamie Johns
Beauty Category Director

Casey Burt
Director of Customer Success
Table of Contents

1. What Is a Subscription Business Model?
The model was first introduced to the world in the 1600s by newspaper and book publishers, but with advances in technology, it’s become increasingly popular in the eCommerce space.
While you can create a subscription experience for almost any product or service, for retailers and eCommerce merchants, the business model is best suited for consumable products.
For instance, coffee, beauty supplies, and pet food are perfect products for subscriptions because consumers must replace them on an ongoing basis.

On the other hand, pots and pans aren’t a great fit for subscriptions because consumers don’t need to buy cookware on a recurring basis. In other words, pots and pans are less consumable than coffee and beauty supplies.
It’s also important to note that subscriptions can be a merchant’s primary business model or one part of a larger business strategy.
Some merchants such as Color&Co make a subscription experience their primary business strategy. We refer to these merchants as subscription-first businesses.
Other merchants — commonly large brands — incorporate subscriptions into their overall business strategy. In this instance, subscriptions might make up only a portion of the brand’s revenue. We refer to these types of companies as subscription-second businesses.

2. Types of eCommerce Subscription Businesses
There are three primary types of subscription business: Subscribe and Save; Curation; and Membership. Each model can help you achieve your business goals, but they have unique benefits and challenges.
Subscribe and Save
A Subscribe and Save experience — also known as a replenishment or auto-ship service — provides regular, recurring delivery of a product to consumers. Subscribe and Save is also the most popular business model among consumers. If you already have a transactional business and want to jump into subscriptions, this is the best option.
Benefits:
- High conversion rate. Subscribe and Save has the highest conversion rate among the three subscription business models, according to McKinsey. Sixty-five percent of consumers who consider a replenishment service subscribe.
- High retention rate. Replenishment services also have a high long-term subscription rate: 45% of subscribers keep their subscription for at least one year.
- Less operational complexity: Subscribe and Save is easier to launch than other subscription models. With Subscribe and Save, you’re selling products you already have, meaning orders should be easier to fulfill. You’ll never have to hunt down new products, the same way you will need to with a curated subscription experience.
Challenge:
- Increased competition. Merchants of all sizes and across verticals are launching Subscribe and Save experiences, thanks primarily to the benefits highlighted above. To thrive in this space, you’ll need a top-notch acquisition and retention strategy. More on this later.
Subscribe and Save Examples:

The Honest Company
The Honest Company, a baby and beauty brand, offers two types of subscriptions: a diapers and wipes bundle and single item subscriptions. It’s easy to understand why Honest chose to bundle diapers and wipes. New parents go through both at an astonishing rate so getting them delivered to their doorsteps is a huge convenience.

Peet’s Coffee
Coffees and teas are an excellent fit for Subscribe and Save. They’re consumable items that are part of many shoppers’ morning rituals. Peet’s subscription experience delivers coffee to shoppers every month.

Tata Harper
Clean beauty brand Tata Harper lets shoppers sign up for a recurring order that matches their needs. For example, consumers can select a delivery frequency between 1 to 6 months.
Curation
A curated subscription experience seeks to delight and thrill consumers by varying the products being shipped and appealing to a sense of curiosity. Curation, also known as subscription boxes, are best for niche products.
Benefits:
- Highly profitable. When done right, curation can be extremely lucrative. On average, this business model has a higher average order value than other subscription experiences.
Challenges:
- High churn rate. Curation relies on curiosity. Once a subscriber’s curiosity is met and they understand the type of products they’ll receive on a recurring basis, they’re more likely to churn. Merchants with successful curation experiences dedicate significant resources to personalizing their boxes to keep their subscribers engaged.
- Operational complexity. Curation requires that you source multiple different products for each box on an ongoing basis. Curation also requires that you consider your subscribers’ unboxing experience and spend resources on branding and packaging. As a result, Curation requires more resources to manage than Subscribe and Save.
- High level of competition. Curation is the most common subscription business model. Before launching your program, you’ll need to research your niche.
Curation Example:

Blue Apron
One of the most well-known examples of Curation is Blue Apron. The meal-kit company sends subscribers all the ingredients they need to make a fast and delicious meal.

Stitch Fix
Stitch Fix is a personal styling service. Customers fill out a questionnaire about their style and then they receive a personalized box of clothing regularly.

Claire’s
Claire’s curation experience is called Cdrop. Once a quarter subscribers receive a curated assortment of trendy jewelry and accessories. Claire’s offers three themed “drops” that target different audiences — earring lovers; older teens and younger adults; and children.
Membership
A Membership subscription experience gives consumers access to the value an organization creates in exchange for a recurring fee.
Benefits
- Flexibility. Because you aren’t selling a specific product, you can personalize your membership offering based on your customers’ needs. This will drive loyalty and increase customer lifetime value.
Challenges
- Time-consuming. You’ll need to continually evaluate whether the services and access you offer meet your customers’ needs and adapt.
Membership Examples:

Perhaps the best-known example of a membership subscription is Costco. A membership with the retailer comes with steep discounts on products.
Golf courses are another example of a traditional membership subscription. Members gain access to desirable experiences like the ability to play a round of golf.

Membership subscriptions, however, aren’t tied to a physical location. Wellness brand GNC runs myGNC PRO Access. For a low membership fee, subscribers receive deep discounts, expedited shipping, pre-sale access to products, and swag boxes that are delivered twice a year.

3. Why Launch an eCommerce Subscription Business?
Now that you know about subscriptions, let’s unpack their many benefits.
1. Reliable, Recurring Revenue
Subscriptions’ biggest benefit is that they create a reliable, recurring revenue stream.
2. Increase Customer Lifetime Value (CLV)
Competition and acquisition cost in the eCommerce space is high. Subscriptions offset rising costs by extending CLV and improving ROI.
3. Improve Inventory Forecasting
With subscriptions, you know how many customers are going to buy which products in a given period. This helps better evaluate your inventory and limits the risk of overstocking.
4. Generate More Customer Insights
Subscriptions enable you to generate data about your customers and quickly act to meet their needs. This creates a virtuous cycle in which you can gather information, incrementally improve your buying experience, and then delight your customers.
5. More Interest From Investors
Investors love subscriptions. A predictable revenue model enables you to aggressively invest in growth. In fact, companies with recurring revenue models are valued 8X greater than companies with transaction-based business models.
Subscription-first businesses can also disrupt established industries by offering lower upfront costs because they expect to keep the customer for longer.

4. Build vs Buy: Which Is Best for You?
If you decide to launch a subscription experience, you’ll need to either build your own subscription solution or partner with a subscription technology provider. Here are two key questions to consider when making the decision:

5. Popular eCommerce Subscription Technologies
There are dozens of subscription technologies on the market. The two most common are recurring billing solutions and subscription platforms.

6. Must-Have eCommerce Subscription Technology Capabilities
A successful subscription experience requires robust acquisition and retention capabilities. Whether you chose to build your own subscription solution or partner with a subscription platform, make sure your experience has these features:

7. Step-by-Step Guide: How to Start an eCommerce Subscription Business
A successful subscription experience requires robust acquisition and retention capabilities. Use this step-by-step guide to launch a successful subscription experience.
Conclusion
Subscription experiences are going to continue to dominate the eCommerce space. If subscriptions are right for your brand, take the time to determine which subscription business model is right for your business needs and whether you should build your own experience or partner with a subscription platform. This will ensure you hit the ground running and that your program is a success from day one.