eCommerce
Solution
Summary: The increasing demand for subscription services is why entrepreneurs constantly aspire to set up a profitable subscription business model. This blog will offer you a step-by-step guide to accomplish a subscription service to create recurring value for your customers and ensure the viability of your business.
The subscription industry is one of the emerging sectors within the global economy. The subscription business model refers to a strategic approach to generating revenue. It is a model that allows customers to access a product or service by paying a recurring fee at regular intervals.
You can refer to it as an eCommerce subscription model where products and services ranging from physical goods such as groceries or beauty products to digital services like streaming media or software are offered by sellers.
The subscriptions help build a long-term customer relationship by adding ongoing value. At the same time, it also allows you to create a ready income stream. Thus, you can accomplish an effective and lucrative approach to running your business.
The subscription eCommerce market is forecasted to touch a staggering $2,227.63 billion by 2028 and it has already grown to an exponential figure of 330 billion in sales in 2024. This implies that the subscription business model stands out as an opportunity for existing and aspiring eCommerce business owners.
This guide uncovers the whys and hows behind building a subscription business model successfully.
Let’s start by knowing the different types of subscription business models as the most important aspect of launching a subscription business involves choosing the right subscription model for your business.
Types of Subscription Business Model
The three main types of subscription business models include curation, replenishment, and access. They are as follows,
Curation Business Model
This is the most common subscription business model. They offer a highly personalized experience with the products they sell. Birchbox, Blue Apron, and Stitch Fix are popular names in this category selling products in the apparel, beauty, and food segments.
Replenishment Business Model
Here consumers enjoy convenience and cost savings. They can automate the process of purchasing essential items at a discount often. The products in this category mostly don’t need replenishment. The commodities available in this model are, diapers, razors, pet food, vitamins, and much more.
Access Business Model
JustFab, NatureBox, and Thrive Market are the brands promoting this business model. The subscribers pay a monthly fee to get exclusive perks meant for members only.
Now, let’s check out how to start your own subscription business. Check out the five-step subscription business guide,
Steps to Start Your Own Subscription Business
1. Choose Your Subscription Idea
Start with selecting the right type of subscription model for your business and deciding the range of products to offer. You can add the subscription business models to an existing business or can start from scratch.
2. Select Your Subscription Products
Find out the most appropriate range of products to be offered by your subscription business every month. At this point, you can reach out to brands for partnerships. This will enable you to offer their products to your business in your monthly subscription at a lower cost. Then build a prototype box or sample subscription using the subscription business tools to help new subscribers have an idea of the types of products to be received every month.
3. Price Your Subscription Options
As you know which product you want to offer and have decided the value at which they will be offered to the new subscription service, then you can decide on the subscription business startup costs. You might have different subscription levels based on the offerings. Depending on the subscribers’ commitment to pay the fees, different prices can be set. Subscription taken for the entire year comes at a lower cost than subscriptions paid every month.
4. Start Your Online Store
When you have decided on the type of subscription to offer and the pricing model, then go ahead with accomplishing your online store. Share the images of the sample products, allow the customers to sign up for the next box, and share the product information they receive each month. Choose Shopify to create the website for your subscription business. An eminent Shopify development company will simplify the process of launching your subscription business aided by the Shopify Subscription app or third-party alternatives. This can be done for both existing and new businesses. Shopify Subscriptions helps in enhancing your recurring revenue.
5. Market Your New Subscription Business
When your new subscription business is all set to sell, promote it before your target customers get signups.
Tips for marketing a brand new business:
- Take lots of photos of your product photos to promote them well.
- Set up your brand identity on all your social media platforms.
- Network in online communities.
- Contact micro-influencers to partner with for a nominal fee.
- Keep a budget aside to start building awareness.
- Keep a list of email IDs handy to send newsletters at regular intervals.
- Publish press releases about your new product.
- Run contests and giveaways to grow interest among people in your product
The key to growing your subscription business is to keep up the hard work and the patience level constant at all times.
Subscription Business Success Tips
The greatest risk for subscription business is the chum or attrition rate. The key to the prosperity of your subscription business lies in curbing the chum rate. Here are some effective tips to lower the attrition rate.
- Evaluate the Viability of Your Product
- Have a defined Business Objective
- Be Conservative About Pricing at an Early Stage
- Investing in Personalization
- Prioritise Retention Strategies
- Diversify Marketing Channels and Tactics
- Monitor the Chum Rate
- Keeping Tab on Involuntary Chum
Wrap Up
You need to understand the market and your audience well before you launch a subscription-based business offering. Alongside, you must have the flexibility to adapt to the insights gathered from the data. Every step from initial research, and building the business case to global expansion is significant enough to set up a strong, customer-focused business. Now that you have gathered enough info about the strategies and challenges to gain success in the long run, it would be easier for you to take the plunge. CartCoders is with you on the journey. Get in touch with us and move ahead with establishing a thriving subscription business. Let’s be partners and grow exponentially.