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Why you should consider selling subscription eCommerce products

Subscription products can increase revenue and lifetime customer value. Here are some things to consider.

If you’re selling online, you should consider selling subscription eCommerce products. Despite what you may think, nearly anything can be turned into a subscription product with the right plan and mindset. 

In this guide, we’ll explore various ideas for subscription eCommerce products and explain why you should be selling subscription eCommerce products. 

Let’s get started.

What Products can be Sold as Subscriptions? 

There are obvious subscription products such as software products that can be sold on an annual or monthly recurring basis. Such a model is commonly seen for popular pieces of software such as Adobe Creative Cloud. 

Then you may be wondering, but what physical products can be sold as a subscription? Here are just a few ideas: 

  • Pet Food — Pets are big business grossing over $36.9 billion per year in the US alone selling pet food on subscription weekly or monthly in bulk is a sure-fire way to start bringing in customers. 
  • Grooming and beauty products — subscription boxes are a huge business becoming everyday occurrences with household names such as Harpers Bazaar covering them. Easy to start too as products are readily available from wholesalers or start by buying discount products in-store to fill your subscription boxes. 
  • Clothing and Fashion — another subscription box idea, by getting a customer to pick their favorite brands and styles, you can send out new clothes every month that matches their style. 
  • My kids get a subscription activity box every month. They received it as a Christmas present, and it is great. Built from really simple materials and printed guides, it's a low cost product that a family like mine can keep for years.

And there are plenty more ideas too; literally, any product you think of can be sold as a subscription-based eCommerce product even Amazon recently got in the act by enabling customers to subscribe to grocery and household products such as dishwasher tablets. 

But why should you even consider selling subscription eCommerce products? 

1: Increase your per-customer revenue

Customer acquisition isn’t cheap. After all you have marketing costs such as your website and design then the costs of advertising and web hosting, everything adds up. If your customer costs $20 to acquire, and then your product costs $20 to you, and you sell it for $45, you’re only making $5. 

But what if instead of selling them a single product for $45 you instead sell them a $45 product every month? That means that rather than a $5 profit — if the customer stays subscribed for 12 months you’d actually make $280 in profit over the 12 months.

2: Lower shipping costs

By selling subscription products that you ship monthly you’ll always have a set number of parcels to send that gives you negotiating powers with couriers and shipping carriers all over the world.

Most shipping companies to enter a conversation would want to guarantee a minimum number of parcels, and some will charge you for that number even if you don’t send. That’s why selling subscription eCommerce products puts you in a stronger position. 

3: Easier to manage inventory 

When you’re managing a physical goods based e-commerce business stock can be the most difficult thing. After all too much stock and your cash flow goes out the window, too little and you risk losing customers and damaging your business reputation. 

That’s why subscription eCommerce products offers easier subscription management. If you have 100 subscribers as the time comes to buy stock you know you need a minimum of 100 units and might overstock by 10% in case you make extra sales. 

This is far better than trying to decide if you need to order 10 units or 10,000 units. You are freeing up cash flow so you can build your business up. 

4: Recurring revenue 

The secret to all those multi-million software businesses? Recurring revenue. It works much the same way compound interest does in the sense that it starts off small and grows over time. 

For example, you get 10 customers subscribing a month, but by the end of a year you have 120 customers so the first month you only get 10 payments, the second month you get 20 payments and so on. 

And like we already mentioned the customer acquisition cost is lower as once you have the customer signed up you don’t have to spend any more money keeping them. 

What to be aware of when selling subscription eCommerce products?

While there are many upsides to selling subscription eCommerce products there are the downsides too. 

The primary downside customer churn. A “churn” is when a customer cancels their subscription; some customers may subscribe for years month on month and never cancel, some customers may subscribe for 3 months, cancel and then return later in the year. Other’s may cancel after the first month. 

What’s important like anything in business is don’t rely on it. Until you have the payment from the customer don’t automatically assume they’ll stay subscribed the following month as they may not. 

You should be able to survive fluctuations in active customers due to improved cash flow, thanks to having to hold less stock due to the subscription eCommerce products. 

Wrapping Up

Subscription eCommerce products are a great way to grow your business and improve your cash flow and future prospects in these uncertain times. 

Thanks to the ever-growing demand for everyday products to be delivered rather than popping by the store you couldn’t be starting at a better time. 

While it isn’t all puppies and rainbows, there’s definitely a large upside with little downside.

Have you run an eCommerce subscription product? Maybe you run a subscription box business? Or perhaps you’ve subscribed to subscription box businesses before?

Let us know what your thoughts are in the Commerce Journey Facebook group.

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