Fifteen years ago, subscriptions were just for newspapers and magazines. Now, the modern household has a subscription for everything under the sun: music, streaming TV, clothing, dinner, underwear, and even cleaning products. Many e-commerce brands are jumping to take advantage of the subscription trend, and it’s no wonder considering the stats: 70% of business leaders say subscription business models will be key to their prospects in the years ahead.
If you’re an e-commerce company or DTC brand, you may be wondering if starting a subscription program is right for you. Here are four questions to ask before starting a subscription.
1. Do People Have A Reoccurring Need For Your Product?
Subscriptions aren’t right for every type of product. Ask yourself if your product is a need or a want. If it’s a need, how often do customers have to restock? People are most likely to utilize a subscription for a product that fulfills a legitimate, ongoing need that delivery will save them time or money on. For instance, HelloFresh, one of the most popular services in the subscription space, delivers a need (food, people have to eat) that’s recurring (3x a day, though they only solve for dinner) and that saves money (due to bulk ordering and food waste elimination). That’s an ideal subscription model. If your product fits in the need category, but isn’t something people usually restock consistently, then a subscription might not be for you.
2. Do You Have The Product Variety To Keep Consumers Coming Back Every Month?
If your product fits neatly into the want category, never fear. Plenty of successful subscriptions are built on a feel-good treat-yourself mentality. The key to making a subscription work in that case is to have enough variety to keep customers in new and exciting products. This is best coupled with a dedicated marketing plan for creating anticipation around the next box. Take FabFitFun for example: the runaway success of the seasonal subscription box that offers products in the beauty and self care spheres is due largely to influencer marketing campaigns -- the company sends free boxes to micro and macro influencers in exchange for User Generated Content (mostly videos posted to YouTube or Instagram) to drum up excitement in the weeks before a seasonal drop.
3. Do You Have The Operational Support For Subscriptions?
The behind-the-scenes work that goes into executing a subscription service is greater than you might think. You’ll need new sales tracking, hefty website and app redesign, new fulfillment workflows, new packaging, bulked up customer support, and more. Luckily there are a few ways to outsource this work, depending on your brand. For instance, if you’re a clothing line, companies like CaaStle will provide all the support you need -- from technology (creating the complicated apps that let subscribers choose their clothes each month) to advertisement. And if you’re concerned about fulfillment, automated 3pl services designed for e-commerce like Project Verte can handle subscriptions a lot faster than traditional warehouses, by using AI for efficiency.
4. Can Your Revenue Model Evolve To Support Subscriptions?
For many successful subscription services, the key is getting creative with revenue models. For example, Birchbox’s model uses smaller sample-sized products in the subscription box then leads customers to buy full-size products from their website. Similarly, healthy snack-food subscription box Graze has diversified to selling larger multipacks of their branded snacks online, with discounts for subscribers, and used the traction behind their subscription to branch out into supermarkets. It’s important to know how a subscription works into your brand’s overall revenue model and growth plan.
For more helpful business articles, check out the rest of Project Verte’s blog!