Obviously subscriptions models are much older than the advent of internet. The most common ones being monthly magazine and newsletter article subscription. However, ecommerce subscription models are relatively new, but they are becoming very popular, thanks to their ability to improve customer engagement and increase conversion rates. According to Invespcro, more than half (54%) of online shoppers say they have an ecommerce-based subscription service. It is also important to note that visits to subscription boxes have grown 3000 fold over the past three years. Even giants like Amazon have not been left behind. But why exactly should you invest in an ecommerce-based subscription service? Let’s find out.

The Rise of E-commerce Subscription Model – Statistics and Trends

Infographic by- Invesp

Consumers simply love subscription services

This is easy. If the consumer loves it, go for it. As we have already mentioned, more than half of online shoppers love subscription services and this is bound to increase in the coming years. And what makes it even more interesting is that once you subscribe to something, it is hard to cancel. According to Avinash Chandra, the owner of BrandLoom, subscriptions saves the customer the need to make a decision every single time they want to purchase a product or a service. This leads to steady flow of income and predictability.

It gives you better return on investments

The success of your business is obviously going to rely on your ROI. Effective customer acquisition strategies are big deals in today’s online marketplaces. In other words, repeat business is the secret to running a successful and sustainable online business. In fact, 82% of small business owners agree that repeat customers are the backbone of any business. It makes sense to say that subscription models are very effective customer retention tools. If the customer has subscribed to a weekly service, for example, it means that repeat business is confirmed right at the point of purchase.

Great Margins, Great Value

Research has shown that 30% of purchases online are returned. This reduces the profit margins for retailers. However with subscription models, it is difficult for a consumer to return what they have subscribed to. This means that there are no additional costs associated with returns, shipment and replacement. Coupled with high retention rates and high repeat business, it means that money spent on marketing is minimized to reduce costs and increase profitability.

It also makes it easy to plan and negotiate great deals with shipping companies if you know approximately how much shipping you will be doing in a month. The ability to forecast shipping costs, the number and weight of packages makes it easy to cut your costs and reduce contingencies. From the customer’s point of view, budgeting becomes a breeze and less time is spent worrying about your purchases because it is predictable.

Personalized Experience

Nearly a third of online shoppers who have subscribed to ecommerce subscription model say personal experience is important to them. Imagine purchase a shirt online only to find that they sent the wrong size? Receiving a purchase and receiving the right stuff you ordered for are two different things. Modern ecommerce subscription models and software have algorithms that offer personalized experience to shoppers.

Buyers want you to make decisions for them. Things like choosing the right color, typing payment information, comparing prices and offers and giving shipping details are things buyers want to avoid. You can make their shopping experience easier by offering a subscription service and they will likely continue shopping from you.