Everything You Need to Know About eCommerce’s Fastest-Growing Business Model

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.

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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

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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.

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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.

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Subscribe and Save

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Subscription Boxes

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Membership

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

48%

Increase in subscriptions created in 2020, compared to 2019.

75%

D2C brands that will offer a subscription service by 2023.

77%

Brands that believe a recurring revenue program is a “prerequisite for doing business.”

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

Free shipping

Early access to sales

Subscription-only product offerings

Best deal guarantee

Benefits of Subscription Offerings

Reliable, recurring revenue

Repeat customers spend up to 67% more than one-and-done shoppers.

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Increased customer retention

A 5% increase in customer retention can produce more than a 25% increase in profit.

Increase ROI of acquisition

Acquiring a new customer is 5X as expensive as retaining an existing customer.

More interest from investors

Companies with recurring-revenue models are valued 8X greater than companies with transaction-based business models.

Reliable, recurring revenue

Repeat customers spend up to 67% more than one-and-done shoppers.

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Increased customer retention

A 5% increase in customer retention can produce more than a 25% increase in profit.

Increase ROI of acquisition

Acquiring a new customer is 5X as expensive as retaining an existing customer.

More interest from investors

Companies with recurring-revenue models are valued 8X greater than companies with transaction-based business models.

Subscriptions are a major eCommerce trend. They unlock the power of reliable, recurring revenue, which is vital to success in today’s rapidly changing business environment.

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