Subscription Economy: How Can Retailers Use The Subscription Model?
If a one-time purchase is dating, then subscription equals marriage.
Subscriptions are not a new concept. In fact, they’ve been around quite a while. We have grown up seeing newspaper and magazine subscriptions, gym memberships, and advance payments for cable TV. These were all a part of the subscription business model that has very much been there since the middle ages.
However, in the past two decades, there has been a rise in the use of subscription-based models by businesses across the globe and even big retailers have been testing out subscription services. Technological advances have shaped a fertile environment for new business models and given rise to the “subscription economy”.
The term ‘Subscription economy’ was coined by Tien Tzuo, CEO of Zuora – a SaaS platform that automates all subscription order-to-revenue operations in real-time for any business. It defines the new era of business models that have proven to be exceptionally great for the retail business. Amazon is the quintessence of how well the subscription model has proved for the retail business. The e-tailer went from huge to monumental with Amazon Prime – it’s paid subscription service that it rolled out in 2005.
So, why has the subscription economy gained such momentum?
- The subscription model has simplified business processes for retailers. It has freed them from the hassle of tracking repeated purchases thereby adding to their productivity.
- It ensured that the businesses were retaining a larger number of customers on a regular basis. This helped increase their revenue.
- The kind of convenience that this model offered customers, businesses were able to build a strong relationship with their customers and broaden their fan base.
With such long-lasting benefits, retailers decided to jump onto the subscription bandwagon are making the right choice. In an era, where you can have as many competitors as your customers, the subscriptions model seems like the right opportunity to embrace. In this blog, we’ll tell you how retailers can use the subscription model to their advantage.
Remember – uniqueness is the key
Sometimes, people may not be familiar with your subscription business. They are acquainted with the prevalent buy-now-pay-now system that businesses usually use. Subscription businesses are set apart from the typical model in that they offer some unique quality. It could be the discovery of a new product, getting products delivered to the customer’s doorstep, or customizing their experience. It is important to focus on that unique offering while presenting. Let’s take an example –
Freshly tells potential customers their service delivers healthy food crafted by chefs at their doorstep and just need to select their meal plan:
Make customer convenience your top priority
The current generation of customers values convenience over cost. Make it a point to align your business offering with customers’ convenience. For example, Netflix ads and the company’s website reflect how they prioritize customer convenience by promoting the freedom to watch movies at any time. Another example is Trunk Club, who on their feature page draw a simple comparison between their subscription service versus pay-per-product mall shopping.
Keep it simple
Simplicity is the key for any business to succeed. And when its subscription business, a concept that people are gradually adapting to, it is important to keep things as simple as possible. You can do it by placing an informative “How it works” page on your website just like the one Nature Box has:
By signing up for the subscription-based model, many businesses have already realized the benefits it has brought into their system. Subscription economy has the power to transform the retail industry by enabling retailers to attain predictability and consumer insight. The subscription economy is here to stay. Are you?