Subscription eCommerce Business Model: Types & Challenges
- What is Subscription eCommerce?
- Types of eCommerce Subscription Models
- Challenges of Subscription eCommerce
- Tips For Starting a Subscription eCommerce Business
- Outsource Your Logistics and Fulfillment Operations
- Final Thoughts
After the pandemic, the dynamic of eCommerce has changed drastically in India. The dependency on eCommerce has increased, and people are now slowly inching towards monthly subscription models where they get the product they need without manually ordering it at regular intervals. It saves them time, resources, and energy. It works for cosmetics, skincare, food, etc., where people tend to forget to order their products in time. Maintaining a routine is the trend with the new buying generation of millennials and GenZ. Also, with the irregular lifestyle and work pressure, shopping on time is not always achievable. This is where the concept of subscription eCommerce comes into play, and there are several ways to use it to grow your business!
Let’s look at what subscription eCommerce is and what you must keep in mind when starting a subscription-based eCommerce business.
What is Subscription eCommerce?
Subscription eCommerce is a type of eCommerce business model where you sell products at regular time intervals to maintain loyalty and cash flow.
The subscription eCommerce model is ultimately a time game where you need to make sure that the products are delivered on time. This might not be a suitable model for every product. However, it is ideal for everyday needs items like food, beverages, cosmetics, household needs, etc.
Types of eCommerce Subscription Models
An eCommerce subscription model can be of many kinds. It depends on the type of product you are selling and the customer’s requirements. A few of the eCommerce business subscription models are –
In the membership model, the member pays a fee for specific discounts, products, or services.
We have seen these membership models in Amazon, Flipkart, etc. You pay a specific subscription fee every month or annually to receive discounted delivery, priority service, etc.
Subscribe and Save
The subscribe and save model includes shipping a particular product set to customers. It is meant to offer savings for the customer and convenience, and it brings you consistency and a predictable sales forecast.
This model works well with food items or personal care items.
Curation-based eCommerce subscription models include subscriptions in which customers can select the items they want, or brands create special subscription boxes that aim to surprise customers.
Challenges of Subscription eCommerce
The first challenge of subscription eCommerce is complicated logistics. You need to be on top of your inventory management, fulfillment, accounting, returns control, and more since the order must be delivered at the right time every month. You need to think through your supply chain thoroughly before starting and implementing a subscription model.
High Churn Rate
Even though subscription eCommerce brings in customers for a more extended period with loyalty, it can also lead to a higher churn rate if you do not involve the customer’s choices.
Tips For Starting a Subscription eCommerce Business
Figure a Niche
The first step towards starting a subscription eCommerce business is finding a niche for yourself. If you already sell your product through a website or marketplace, it is evident that few products are more popular than others. You can utilize these popular products to form a niche and begin a subscription service with them.
Source High-Quality Products
The next step towards starting a subscription-based eCommerce business is high-quality sourcing products. The first subscription box you sent to your customer will delight them, however, if the quality is not matched in the second subscription box, there is a high chance that they will cancel the subscription. Therefore, ensure that the quality remains consistent each time a new subscription is sent.
Define Your USP
Your unique selling proposition is why the customer will sign up for your subscription box. Figure out how you are solving the customer’s problem and how they will benefit from your subscription eCommerce model. This is why they will sign up and stay with your brand when the market is offering the same thing.
Scale With Demand
When the orders start increasing for your subscription eCommerce model, you must scale with it if you see that you are receiving orders from various parts of the country. In that case, it is time to decentralize the inventory and store it in different warehouses so you can reach customers faster. If your order processing takes longer because of a higher volume of orders, it can impact the customer experience negatively, and your subscriptions can be canceled.
Outsource Your Logistics and Fulfillment Operations
A great way to successfully run your subscription eCommerce business is to outsource your logistics and fulfillment operations to 3PL fulfillment providers. 3PL fulfillment providers like Shiprocket Fulfillment can help you store inventory in multiple warehouses across the country and process the subscriptions month on month with the same amount of skill. This can help you reduce your RTO orders, build long-lasting relationships with customers, and also save shipping costs for your business.
A subscription-based eCommerce model is an up-and-coming trend in India. Many brands have tried it before, but there could be no better time with more and more people inching towards online shopping in India. The proper logistics with comprehensive supply chain management can help you crack this concept and bring in loyal and long-lasting customers for your business.