The era of subscriptions may have started long ago, but gained significant momentum only recently. It all began with the rise of software-as-a-service (SaaS) offerings such as online streaming services for content and music, but has since expanded to other industries ranging from fitness, fashion, beauty, and food.
ResearchAndMarkets forecasts that the global subscription ecommerce market will grow at a whopping 71.45% CAGR by 2025. Paired with GlobalData’s projection of a 21.5% growth of the Indian ecommerce market in 2022, it is wise for your business to consider subscription models seriously. And if you’re already using Magento website development services, you can easily integrate subscription strategies into your offerings.
How does the subscription model work?
Explained simply, subscription ecommerce is a business model that helps your customers ‘subscribe’ to your products or services at regular intervals – daily, weekly, monthly, or yearly – by paying a predetermined fee. Needless to say, a customer who buys from you every month helps generate more revenue than someone who buys once, or occasionally. This model identifies repeat purchases and pushes better deals – in the form of discounts, bundles, free products and services, add-ons, etc. – in a bid to persuade customers.
How will it help your ecommerce business?
In a world where risk and uncertainty are at record levels, businesses should do everything possible to minimize variables. Changing purchase patterns and behaviors, economic volatilities, and global events like the pandemic have made modern-day consumers more wary of their spending habits. They want the best bang for their buck, with the least effort possible.
A subscription model addresses all these variables and offers a viable solution for ecommerce businesses, by ensuring the following.
- Greater customer retention: It’s no secret that acquiring new customers is more expensive and difficult than retaining existing ones. With Magento ecommerce development services, you can create a more loyal customer base and eliminate the need for customer acquisition to a large extent.
- Enhanced shopping experience: Magento web development services can help you offer superior shopping experiences – with effective marketing campaigns, strategic bundling, and personalized recommendations. And where there’s a better shopping experience, there’s a committed, loyal, and long-term customer.
- Better provisioning and inventory management: When you know how much and how often your products sell out, inventory management can become seamless. With Magento web development services, you can create an easy and hassle-free process to track what your customers buy and predict future orders.
- Accurate cash flow forecasting: Perhaps the greatest gift of the subscription model is business predictability. Apart from ensuring consistent cash flow, a subscription model helps remove guesswork in finance management.
- More upselling opportunities: If your subscription model allows for product curation, this is a great opportunity for you to cross-sell or upsell. A customer who’s already happy with your subscription options is more likely to be open to other suggestions.
How does it appeal to customers?
Subscription models are a great idea not just for businesses, but end-users too. Here are a few reasons why your customers might prefer it.
- Convenience: When a customer subscribes, they can just set it up once and forget about it. And when the products they need arrive at their doorstep without them having to remember it, customer satisfaction becomes customer delight.
- Budgeting: Oftentimes, subscription ecommerce offers opportunities for product bundling, wherein you can combine related or frequently purchased products and services, or discounts and offers. Regular discounts and flat fees mean that customers can avoid unexpected costs and stay within budget.
- Personalization: Studying your customer’s habits can not only help you cater to their interests better, but also upsell other products and services relevant to them.
- Flexibility: A subscription model allows your end user to adjust their order according to their needs, any time they want. This flexibility is also available when it comes to billing terms and options, frequency of delivery, and more.
So, how do you set up a subscription service?
If you’ve never offered subscription-based products and services before, it can seem a bit daunting to try it. But if you’re sold on the idea of subscription ecommerce for your business, there is a world of opportunities for you. Magento development company offers a wide range of extensions that can be easily integrated into your ecommerce store – either as a template or a custom extension. With Magento ecommerce development services, you’ll be able to:
- Manage flexible subscription plans
- Append subscriptions to a wide selection of products
- Set up payment gateways for recurring purchases
- Integrate AI-driven recommendations
- Save shipping costs by grouping subscription deliveries
- Notify and update customers on billing details via email
And that’s just scratching the surface. Magento offers a plethora of features and benefits to businesses and end users alike. To know more about how you can leverage Magento website development services to boost your ROI, get in touch with the experts at Tenovia today!