Themed subscription boxes like Birchbox, which ships a personalized box of beauty products, or MeUndies, which sends a set of designer underwear, are monthly bundles selling exciting niche products delivered to your door. But what about every day items like toothpaste, toilet paper, and shampoo? Herein lies the biggest subscription commerce opportunity.
First mover advantage is open to companies who make everyday shopping hassle free. Anecdotally, let’s assume that most consumers purchase food, moisturizer, shampoo, etc. from the same store, at predictable intervals. Further, let’s assume most shoppers resent having to repeat this mundane behavior. A simple service that automates ‘the essentials’ would be compelling in today’s burgeoning sub-commerce landscape.
Here are a few key components of setting up the subscription model from scratch:
An online presence
Numerous beauty, pet supply, and hobby retailers are selling product online with devoted customers. These companies have an advantage, having already carved out their brand presence. New businesses on the other hand, will require a robust marketing strategy to get customers in the door. Presale campaigns, media buys, PR, and direct mail are all important aspects in getting people aware of a new offering.
A subscription option at checkout
This is a simple step in the set up process, as companies who already use Shopify, Cratejoy, or ScriberBase as a subscription manager can easily create a subscription service option for their customers. Making the checkout options conspicuous helps to avoid confusion so customers don’t confuse a one-time purchase with a recurring one.
A reliable fulfillment solution
This is perhaps the single greatest challenge for most companies setting up a subscription model. Building a rhythm in concert with a fulfillment partner can be tough. Further, a reliable CRM system that automates the delivery of orders to the fulfillment house can avoid major logistical headaches and customer service issues. Customers expect merchants to deliver products soon after purchase. The longer the delay the more unhappy the customer is. Talk to your fulfillment partner about their capabilities to ensure they’re a good fit.
Scalability through Customer Service
Sound odd? It isn’t. A-players in the subscription space have incredible customer service. They make it easy for customers to reach them by email, phone, and chat. And, yes, they have real human beings answering the phones! No avoidance, no long delays, and no black holes when sending an email to the support department. From an ROI perspective, customer retention is key to the long-term success of a subscription service. Happy customers are long-term customers who remain loyal. So, while real estate agents rhyme off “location, location, location”, sub-commerce experts sing a similar tune: “retention, retention, retention”.
Managing recurring payments
Not all revenue is created equal. A subscription order is significantly more valuable than a single order. However, there are still challenges in dealing with recurring payments. Having a robust payment processor goes a long way! Keep a close relationship with your payment processor and ensure they have experience onboarding subscription merchants with similar billing models. This can help avoid high processing fees, billing errors and withholdings (or reserves).
What does it take to start a subscription business?
All the tools you need to start up a subscription business are available to you. Contact us to get started on your new business today!