One of the lasting behavioral impacts of pandemic is realization that for most people geographical location has become irrelevant — so long as there’s an internet connection. The way we live, the way we work, and the way we shop and buy as a customer in both business and consumer scenarios, has changed forever.
For businesses and retailers, commerce strategies shifted from considering commerce as part of a long duration and a long-term digital transformation initiative to desperately needed business lifeline that could enable them to survive a global pandemic with digital commerce-based revenue streams.
With all businesses and retailers trying to catch-up on the digital commerce bandwagon, differentiation on online and omni-channel customer experience and customer journey with personalized shopping experience has become essential for long-term success of digital commerce initiatives.
The customer experience is rapidly evolving from one that’s built upon the transactional digital commerce experience to one that’s rooted in deep, ongoing and enriching and long-term relationships with customers. This has resulted in significant growth in subscription digital commerce for building consistent and reliable customer base with predictable revenue model and long-term customer loyalty.
A subscription business model is a business model in which customers must pay a recurring price at regular intervals for consuming product or service. Subscription commerce is extension of subscription business model for digital commerce for buying product or services online. The subscription commerce market has grown by more than 100 percent a year over the past five years. Global digital commerce subscription market will be worth $246.6 billion by 2025.
Following are three major categories of subscription commerce products and services. Specific commerce platforms may offer single or combination of following categories as part of their subscription business model:
- Replenishment: Replenishment subscriptions allow consumers to automate the purchase of commodity items, prescriptions or frequently ordered and replenishable business inventory
- Curation: Curation subscriptions usually have surprise element by providing new items or highly personalized experiences
- Access: Access subscriptions require paying a monthly or specific duration fee to obtain lower prices or members-only perks for utilizing service or purchasing specific products
Benefits to customers utilizing subscription commerce:
- Hassle free shopping experience with configurable subscriptions
- Free delivery in most cases with instant gratification
- Planned purchases and budgeting clarity over subscription period
- Easy to understand pricing structures with longer duration visibility and consistent pricing
- Never running out of product/services after subscription configurations
- Personalized experience and peace of mind
Benefits to businesses offering subscription commerce:
- Strong and stable customer base with stable and recurring and predictable revenue
- Higher customer loyalty
- Lower customer acquisition cost
- Efficient inventory management, shipping and logistic cost optimization
- Better analysis of long-term customers provides better insight into shopping patterns
- Possible to build reliable AI and ML models to better predict and serve customer needs
- Increased valuation of business because of reliable and recurring revenue customers
- Higher customer lifecycle value
- Better customer differentiation, segmentation, loyalty management and reduced churn