In one of our previous articles, we discussed at length the importance of testing an eCommerce subscription model on your Shopify store.
We did a deep dive into what subscription eCommerce is, how to run a subscription-based business, why you should consider adding a subscription model to your Shopify store, and of course, the benefits that businesses can reap from a subscription eCommerce model.
If you missed out on that post, don’t forget to give it a read before moving on to read this one: What is an eCommerce subscription model for Shopify stores.
But if you’re already up-to-speed with what a subscription revenue model is for eCommerce businesses, let’s move on to the next step.
Knowing the different types of eCommerce subscription models you can run.
Different types of subscription eCommerce models for Shopify stores
1. Replenishment/ consumables eCommerce subscription model
This is the type of subscription model wherein you make it easier for your customers to make their regular purchases. These are products that they would typically need to replenish after a few days, weeks, months, or even years.
With the replenishment subscription model, your Shopify store can provide regular, recurring deliveries of consumable products to consumers. Without them having to make a purchase time and again.
To put things into perspective, this type of eCommerce subscription model is generally used by brands that sell food or groceries or products like razors, toiletries, body care, flowers, etc.
Dollar Shave Club is a good example of an eCommerce business using this subscription model.
2. Curation or discovery subscription eCommerce model
This eCommerce subscription model focuses on delivering ‘surprise and delight’ to the customer by either providing new items or highly personalized experiences in the subscription boxes. eCommerce businesses that make use of this subscription revenue model, include categories like fashion and apparel, beauty, health and wellness, food, etc.
A good example of this is Birchbox, a monthly beauty and grooming subscription box that customers can subscribe to based on their needs.
Another example is The Style Cracker Box, which lets online shoppers take a questionnaire to define their personal style preferences. They then ship out products on a subscription basis catering to those preferences, surprising the end customer on delivery.
3. Bargain or access subscribers subscription model
In this type of eCommerce subscription model, a business typically lets online shoppers pay a monthly fee to simply avail bargained prices or members-only access to discounts, deals, and other perks. You will see this eCommerce subscription model being used commonly in industries such as health and wellness, packaged foods, and fashion and apparel.
NatureBox is a good example of this type of eCommerce subscription revenue model.
In fact, even Amazon uses this model, wherein they offer an additional percentage discount on the product when you subscribe to it.
While the above three subscription models are what we commonly see in the eCommerce industry, there are a few more you should know of.
4. Fixed eCommerce subscription
This model is pretty straightforward. In this case, the online stores offer a set price for a specific set of products/ goods for a defined duration of time.
So basically, you give the online shopper the option to subscribe on a weekly/ monthly/ yearly basis; but the brackets and the pricing are defined by you, and you do not use any of the above strategies in your subscription model.
5. Unlimited subscription model
While this is the most uncommon in the eCommerce world, unlimited subscriptions refer to when a customer can pay a fixed price for unlimited use of a collection of products. These products can then be used by the consumer personally or by a group of friends and family.
You would have seen this model at burger joints, where once you make a purchase, they offer you an unlimited refill of beverage.
6. Pay as you go subscriptions
Also known as the convenience eCommerce subscription model, here the online shopper pays for the products as and when they make use of it.
Again, this isn’t something that you will see eCommerce businesses making use of. But if you offer services as add-ons along with products, you can consider this subscription model.
For instance, if you sell house cleaning products and offer clearing as a service too, you can apply the pay-as-you-go model because your consumers may not need professional cleaning at all times.
7. Premium member subscriptions
In this case, you nudge a consumer to pay a basic access fee to use your products. But at the same time, you charge them an additional fee to access premium content.
This premium content could include exclusive deals, discounts, or first-access to limited edition products.
8. Freemium subscription model
This one is just for you to know as you will come across this term commonly when searching for subscription models.
In this case, your business offers something for free in exchange for the consumer’s contact information. This could be a product or service that you can offer on a recurring basis in order to learn more about the consumer.
Now that you know the different types of eCommerce subscription models, the next step is to know which one suits you best.
How to choose the right eCommerce subscription revenue model for your business?
Subscription models are not a must-have, but at the same time, they’re worth exploring if your business revenue can be double using it. But to be sure that you’re taking a step in the right direction, we recommend following the steps below to choose the right model for your business:
- Take a look at your new vs repeat customers and note down the % sales each contribute to
- Identify the buying patterns of your new and repeat customers
- Take note of which products your consumers tend to buy repeatedly
- Calculate an average period of time over which these repeat purchases are made
- Identify the products that you can sell a subscription on and consider also creating bundles of products that tend to be bought together repeatedly
- Calculate your buying and selling price to see what price you can sell the subscription at and if you can offer value-adds like discounts on them
- Choose a subscription model based on the answers to the above questions and analysis
- Test the eCommerce subscription model on a few products/ set of products to see the response you get
- Optimize your subscription model for better responses and don’t be afraid to discontinue it if it doesn’t work for your business
Remember, a subscription model is targeted at encouraging consumers to make a long-term commitment to your Shopify store. At the same time, it helps you secure sales and revenue over a defined period of time, leading to more stability in your business growth.
But starting a subscription model and turning it into a success includes a lot of deep diving into customer data to understand them better, and creating an infrastructure where they can make this subscription purchase.
That’s why we partnered with ReCharge Payments to help Shopify stores set up and run successful subscription models.
The Shopify app offers a comprehensive solution that lets you set up a subscription model on your storefront easily. But it also comes with other powerful features like a customer portal, merchant portal, unified checkout, subscription automations, and more.
Want to know more about how you can set up different subscription models with ReCharge Payments?