Subscription-based business models satisfy the consumer need for convenience. The ability to receive products or services on a regular basis with minimal effort from the consumer is a reason for their rise in popularity. This article will explore how this industry has made headway and is projected to grow, alongside tips for starting your own subscription business.
Subscription commerce industry
The subscription commerce industry is built upon the concept that consumers are provided with goods on a recurring basis with little input after the initial set-up. Once a user subscribes to your service and sets the parameters of their account (i.e. frequency) their goods should be sent out and their account billed automatically. There is normally a choice of how frequently you would like to be provided with the goods, such as on a weekly or monthly basis.
Many different industries have found a way of successfully turning their offering into a subscription service and more are set to jump on the trend. Disruptors such as Netflix and Spotify charge their customers on a monthly basis so they can enjoy unlimited access to their service. They have turned core leisure activities, such as watching TV or listening to music, into a subscription service that few households are without. Other verticals, including beauty, food and clothing are also innovating in the subscription space.
Subscription commerce market size
A report by Fuel by McKinsey, reveals that the United States dominates the subscription commerce industry, with the total revenue generated in 2017 predicted at $5.8 billion. Comparatively, the UK generated £583 million in the same year, according to a report by the Royal Mail. However, this is estimated to grow to £1 billion by 2022 so it is worthwhile for UK facing merchants to explore whether the subscription business model would work for them.
Subscription commerce statistics
Research by Finder shows that over a quarter of British consumers subscribed to one or more subscription box services in 2018, with the average spend per person valued at £60 a month. Furthermore, many consumers have multiple subscriptions so it is worth targeting groups who already see the value in this type of experiential service.
The tools you need to start a subscription commerce business
Although we have outlined the benefits of subscription commerce, it may not be the right match for every business and there’s no point jumping on the bandwagon if it doesn’t work for you. Below, we have selected a few points to consider if you are looking to venture into this industry.
The right product
Having the product or service that can easily be adapted to fit the subscription model is imperative. If you are selling an item or service that consumers will only purchase once in a blue moon, when required to or as a one-off luxury, then it is probably wise to avoid. A selection of unique or practical items that could be compiled monthly or quarterly is a good starting point for a subscription box. This concept works particularly well for beauty and wellbeing products, snacks or novelty items as consumers like the element of surprise and to feel as if they are being treated.
Subscription commerce platform
Regardless of your business model, you need to have an eCommerce platform or shopping cart solution, that fits your requirements. Creating a user-friendly interface should be high up your list of priorities to encourage potential customers to convert. So too, should providing payment methods that suit the lifestyles of your target audience. emerchantpay is integrated with a wide range of shopping carts that are easily customisable and designed to reduce your abandonment rate.
Payment solution
For merchants, it is important not to neglect the payment side of subscription commerce and to work with a payment service provider that can facilitate recurring payments. Your payment processes should be automated so that your customers are not required to enter their details anew each time they are sent your products and services. emerchantpay can help you to grow your subscription commerce business and enhance customer experience. We offer a wide range of alternative payment methods and understand global payment preferences.
Talk to one of our payment experts today to find out how emerchantpay can help you to accept recurring payments seamlessly.