The Three Types of Subscription Programs
Rob HolthauseNovember 8, 2018
There has been an explosion of subscription programs over the past few years, and the trend isn’t slowing down at all. Companies large and small are turning to subscriptions to increase revenue while providing unique and pleasing customer journeys. With all the added value for customers, as well as increased lifetime customer value and ease of implementation for merchants, it’s easy to see why this simple concept has so dramatically shifted the eCommerce landscape.
Subscriptions are suitable for a surprising variety of verticals, and can be used to collect recurring revenue in a few different ways- even merchants who wouldn’t consider their products to be subscribable may be surprised to learn how recurring orders can benefit both them and their customers. There are three basic types of subscription programs- Auto-ship, curated box, and access.
Auto-ship subscriptions are the most common, and are often implemented specifically to provide convenience to customers. They work very well on any regularly-purchased good, like vitamins, skincare items, coffee, and pet food. Customers select the item(s) they want to receive, and can then select the delivery frequency. Orders are automatically generated and sent to the customer to replenish them. This saves customers time, energy, and trips to the store. Chewy.com is an excellent example of auto-ship subscriptions, as they have a program in place for pet food and treats.
This may be what most people think when they think about eCommerce subscriptions. This method was popularized by brands like Birchbox, though there are now many brands for many different tastes. With curated boxes, customers receive new and exciting shipments from the merchant each month, with new items inside. Curated boxes are typically sent to all subscribers on a specified day of the month. These subscriptions or “clubs” as many merchants like to call them, work very well for makeup and skincare products, alcoholic beverages, snacks, etc.
Though less common than Auto-ship and Curated Box subscriptions, access subscriptions are no less important. Access subscriptions offer recurring billing functionality to merchants, to provide customers access to a service. The most recognizable example of an access subscription is Amazon Prime, where a customer is billed yearly in exchange for free shipping, entertainment options, etc. Access subscriptions can also be found on education websites, professional associations, and even retail sites wanting to offer customers a Prime experience.
Many brands and retailers are now finding creative ways to offer all three types of subscriptions to their customers, increasing customer loyalty and overall revenue. As the trend continues and merchants keep leveraging the subscription model to attract and retain customers, it will be interesting to see how these subscription types change to meet both merchant and customer needs.