A subscription model is one where customers are charged a recurring, usually monthly, fee for the recurring delivery of products. For example, Dollar Shave Club offers a customized monthly subscription box for shaving and personal grooming purposes. This type of business model is best suited to products that people need to buy on a regular basis. Birchbox is another example…they offer a monthly makeup and skincare subscription box.
Benefits of subscription model:
- Increased customer lifetime value: Due to the recurring purchases, the customer’s value to the business increases significantly. For example, if a customer buys a recurring monthly subscription box worth $10 for a year, then his value to the business will be $120, instead of just one time $10 purchase.
- Increased revenue: Taking the point above to its logical conclusion..as customer lifetime value increases, revenue then increases over time
- Better Forecasting: With a recurring payments model, revenue forecasting and prediction becomes more accurate. Once you have a good handle on your customer retention percentage, you can begin to better predict what your revenue will look like in the months ahead.
- Streamlined logistics: The more products that are shipped to less destinations, the more streamlined your shipping becomes...that saves time and money. Think of it this way… if you sold 100 products at $10/each, that would be $1,000 in sales. If each of those products went to a different address, you’d have to pack, label, ship, and track 100 products. But if 20 products went to 1 customer on a subscription plan you’d have way less boxes to pack.
See how some of our clients created their own subscription models:
- Tayst.com - Compostable Coffee Pods
- Using Recharge, we created a highly modified and customized subscription service consisting of 5 unique plans.
- We also used Recharge for Head and Heal and created a subscription plan where customers can choose the frequency of delivery.
So, whatever subscription model you need, we can create...no matter how complex. Please contact us if you are interested in a subscription ecommerce model and our experts can help you figure out the best subscription model for your store.
Lucent Innovation is a full-service Shopify web design and development company. We build ecommerce websites that are ready to sell, scale, and grow.
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