Subscription Based Models: Insight into the Advantages and Disadvantages

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Subscription based Models

You have heard about eCommerce but subscription based?  Well, let us get to the depth of the matter and understand what it actually is!

What Subscription base eCommerce is?

Subscriptions are sure shot winners for better efficiency as well as effectiveness for the ecommerce ventures.  When this model is in place, the ecommerce website can get higher revenues, less retention spend and more order predictability. Greater margins and quick customer feedback loop will follow automatically.  When we are talking about subscription ecommerce, we need to talk about the two basic types that exist.

Recurring orders or Convenience Commerce:  Here the customer receives the same order automatically as he has committed for a repeat purchase.

Curated collections or Discovery commerce:  Here, the consumer is helped to try out new products which they wouldn’t have known otherwise.

Apart from these, the subscription boxes are the most popular ones wherein the customers agree to pay a fee, subscription fee so that they can receive the items delivered to them personally in a box.  This could be every month, every fortnight or every week.  These generally are male grooming products, groceries, cosmetics, movies or pet food.

Also popular as ‘subcom’, this concept is not new.  They have been here since the past 150 years in one form or other.  This commerce provides a steady inflow of revenue and the main reason they have become popular is about the curation, surprise, value and mystery that come along with it.  The most common subcom categories are fashion, beauty, organic food, kids, crafts and activities and eco-friendly products.

A few examples of Subscription based Models:

1) Fabbag

fabbag2) Graze

graze

3) Naturebox

naturebox

Want more examples of this Subscriptions based sites? Smashinghub has provided very beautiful examples of this.

Getting the right eCommerce website design for a subscription based business is a challenge for all those who wish to make a foray into online business.  There are around nine models for the subscription websites out of which six of them are paid models and three are free models.  For sure shot success, one would need a free portal or blog or community to drive the traffic and next, one would need premium subscription website which could be used as the main monetization medium.

Membership subscription model:  This model provides the members with whole host of information on a topic or a bunch of topics.  It will create a community of these individuals that share this common interest on a specific topic.

Newsletter subscription model:  This is mainly used to gather subscriptions for digital newsletters or print newsletters.  It also gives access to various issues that are a part of the newsletter.

Magazine subscription model:  This is set up especially to sell subscriptions for digital magazines.  It also offers access to different magazine issues.

Periodical subscription model:  This model offers updated news that can be read only online in HTML and cannot be downloaded.

Application subscription model:  This gives access to the user to an application which in turn allows the users to make use of calculators, access results, and input information and search proprietary databases.

Library subscription model:  The subscribers gain access to library that is kept updated at regular intervals of time with new information.

Community subscription website model:  This is one networking tool that is powerful and relies basically on content that is generated by users.

Portal subscription website model:  This model gets its content from external sources as the portals are mainly built to feed a set of audience.  These portals are designed specifically for the search engine optimization purpose, lead generation, email marketing and list building.

Blog subscription website model:  This model mixes the content that is generated by users with the publisher’s and they are updated at regular intervals with articles posted by a few authors.

When a subscription website attracts certain fee, it needs to offer immediate benefits to its users.  The above mentioned models, six of them do just that.  The affinity models serve the purpose of building audience who may later want to get into paid subscription.

Advantages:

  • Management of business becomes easy as there is a predictable monthly sale.
  • Giving the customers a box of goods every month will definitely help in building long lasting relationships with the customers and also attract potential customers.
  • This kind is found to be ideal for such products whose purchase may cause some amount of discomfort while shopping in the offline stores.  The items need to be bought regularly and in bulk too.  Once customers are confident of the size and assured of the quality, they will feel good to receive them directly to their place.
  • The service can be extended to delivery opportunities and the supply chain can be automated too.  This platform also will provide ground for upselling thereby providing for generating more revenue.

Disadvantages:

  • Offering a curated set of products month on month involves a whole lot of work.  It is definitely a huge challenge to create the same sense of delight for the customers at all times.
  • Having this kind of a model is altogether a different ball game and you have to offer support to your customers in the form of a community.
  • Difficult supply chains as the third party logistics include drop shipping, inventory warehouse systems and branding of the package that is to be delivered.  All these tasks make the entire process a complex one.
  • One should also take into consideration the returns policy for such deliveries that are subscription based.  One has to keep an eye on the returns metrics too carefully.
  • It is extremely difficult to scale the curated services and the difficulty is more so when it is niche luxury products.

In case you wish to building a Subscription based eCommerce website that supports subscription based service, then you are at the right place.  At M-Connect Media, we have so far worked on many an ecommerce website and have seen them grow exponentially.  If you want us to weave similar kind of magic for you, we are willing to do so.

Get in touch with us or email us and our people will call back on you!

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One comment

  1. Thank you Darshit for describing each subscription model with ease and providing the advantages and disadvantage of it. Now, I am well aware about different types of subscription models.

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