E-commerce subscription service: what it is and how to implement it in your business (with examples)

Have you ever heard of the International Wine of the Month Club?

As they say, they’ve been sending expertly selected wines to U.S. residents on a monthly basis since 1994. In a way, they’d already established themselves as a subscription-based service before this model took off online.

Subscription-based e-commerce shops are gaining more and more ground.

Have you thought of implementing this system, but you don’t really know how to do it or how you could profit from it?

If the answer is “yes”, then read on, because we’re going to tell you all you need to know.

Off we go. 😉

👉 What a subscription-based e-commerce is

First of all, a definition:

A subscription-based e-commerce is an online business model whereby customers pay to receive products periodically.

Although monthly or trimestral deliveries are the most popular choice, how often the client receives the product depends on the subscription plan they hire. This allows clients to get an item they frequently use without having to order it every time they run out of it.

But that’s not it.

Theme-based subscriptions, which have enjoyed a lot of attention lately, also fall into this category. Apart from being a convenient subscription service, they also offer an added value.

But let’s go step by step. We’ll go back to this later. 😉

👉 Why should your e-commerce offer a subscription service?

There are two main (and obvious) advantages:

  1. Loyalty: subscription services establish a long-term relation with the client beyond one-off purchases. Don’t forget the customer acquisition cost (that is, the money you invest to turn a potential customer into a buyer) is high, so getting clients to buy from you on a regular basis is more profitable.
  2. Recurring income: by promoting periodical purchases, this system allows you to accurately work out your monthly income. Some clients may choose to end their subscription, of course, but it’s unlikely that all of them will do so at the same time. Stable income will set your mind at ease.

It doesn’t sound bad, right?

Let’s move on, then.

👉 E-commerce subscription models (with examples of shops that have implemented them successfully)

Not all subscription models are suitable for your business, so going for one or another depends on the kind of product you sell. And on your creativity, too.

Can you imagine a subscription service of man underwear or stationery?

As it turns out, these two examples are real – and successful – and they owe part of their success to finding a market niche and a good way to exploit it.

Keep reading to learn more about the different subscription models with equally interesting examples.

✅ 1. Provision model

Every two months, you order the same coffee capsules, contacts, or even whey protein.

In any case, wouldn’t it be more convenient to have it all delivered automatically?

That’s how this subscription model works: it addresses this need by regularly sending customers a product they frequently buy and rewarding them with a discount.

Subscribers profit in terms of:

  • Convenience: they get product sent home on a regular basis without restocking. Customers stop worrying because one of their concerns is gone (which is quite something). 
  • Saving money: subscriptions can be promoted by offering discounts for recurring purchases. Discounts typically range from 5% to 10%.

These advantages can be exploited to hook clients up.

➡️ A. Holland&Barrett

This health food retailer uses this subscription model with all of their products.

They give you two options: “Order one time only” and “Subscribe and Save” (if you notice, they highlight the idea of saving to add value to this option).

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These are some of the advantages of their subscription:

  • 5% off for future orders.
  • Free delivery.
  • Every fifth order is free.

With this strategy, they make sure clients complete at least 5 orders before cancelling (if they wished to do so), as they want to get the fifth order free.

Besides, customers are allowed to choose the frequency (from two weeks to 6 months), which makes the whole restocking process much more flexible.

Who would like to miss out on that?

➡️ B. ON THAT ASS

This store is halfway between the provision model and the discovery one (which we’ll see in a second).

Based on the name, can you guess what they sell?

It’s – no more and no less – a monthly subscription to boxer shorts for men (and boys).

Due to daily use, underwear gets constantly worn out, so they take advantage of this and make it explicit in their value proposition: “No more walking around in old, worn out or faded boxer shorts”.

Plus, there’s the wow factor of receiving boxers with original designs, especially chosen for you and tailored to your size and preferences.

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On one hand, they provide you with a product people buy frequently; on the other, they choose the underwear for you. Pure luxury!

✅ 2. Discovery model

Who doesn’t get thrilled about receiving a surprise package at home?

Especially when it’s related to one of your hobbies.

In this case, customers pay to get a box with themed – often surprise – products.

What’s so special about this subscription model?

  • Personalization: the products clients get are carefully chosen according to their tastes and preferences. Birchbox, whose value proposition revolves around personalization, is a good example of this, as every month they take samples of beauty products tailored to the client’s interests, as well as their skin and hair types.
  • Wow factor: it’s the perfect way to treat yourself (you know you’ll like it, but you don’t know what it’ll be). These companies are well aware of this, so take care of every single detail – packaging included – to make you think of it as a gift. For example, the online book shop A box of stories uses this as to lure customers, picking every month four surprise books based on their tastes.

From monthly boxes with a selection of different coffee types, to surprise packages with pet toys (the owner will be more excited than the dog, though). There’s a subscription service for everybody.

And, with so much variety, we’ve picked these two examples.

➡️ A. HelloFresh

HelloFresh sends you the fresh ingredients you need to prepare the meals of their website.

Let’s take a look at this subscription model, as every discovery e-commerce has a similar sign-up process.

First, you tick your preferences so they can then personalize the boxes. They bear in mind if you cook for the family, for yourself, and even if you’re a vegetarian.

You can also choose the number of meals you want to prepare in the week (and for how many people).

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Next, you choose a recipe from all the options available and they make sure you’re sent all the ingredients you need.

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As you can see, it’s a fun way of cooking and “forcing” yourself to eat healthily.

➡️ B. LOVEREY

Another discovery e-commerce with an original proposition.

Loverey specializes in educational toys for kids, all the way from newborns to 3-year-olds.

This store sends boxes with expert-chosen toys that boost the baby’s development at every stage of his or her growing process.

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Both this and the previous case aren’t examples of surprise packages, as you know what you’re going to get beforehand. Their function is much more practical, but they’re still fun and offer their customers a unique experience.

👉 3 tips to launch your own subscription service

Do you like what you’ve seen so far and have something in mind for your e-commerce?

Here are some tips that may come in handy to get it started.

✅ 1. Know your target audience

The educational toys of the previous example are a good solution for those parents who don’t know what kind of toy could be best for their children.

In your case, who’s your subscription service for? What’s the need you’re addressing?

Once you know this, you’ll be able to create the best strategy to address your target audience and make them aware of the subscription’s value.

Even though they talk about e-commerce in general, these two posts can prove useful for your subscription service:

✅ 2. Sell experiences or convenience

Don’t confine yourself to describing your products.

Build up expectation and turn it into a positive experience that starts before receiving the package.

Look at the HelloFresh example. Not only do they provide you with ingredients, which you could buy yourself; they also offer a unique experience that revolves around cooking and finding new recipes every week.

In short, make the client feel like their subscription gives them more than just the physical objects in the box.

That’s the key. 😉

✅ 3. Establish the right price for your service

Try not to fall into the trap of setting an excessively low price (as this may be unprofitable), but not excessively high so that no one buys it.

Once you’ve made up your mind, start measuring:

  • How many subscribers cancel and when they do so.
  • The customer acquisition cost.

This will allow you to see if it’s profitable in the long run and, if it’s not, adjust your strategy.

And most important of all: make your customer aware of the value behind the package they get.

👉 Ready to launch a subscription service?

Having a subscription-based e-commerce may be just what you need.

But don’t rush it. Analyze your options thoroughly if you already own an online store and implement this model slowly to see how it works for you.

Come on now! Unleash your creativity! 😉