The subscription-based business model has gained immense in e-commerce, offering numerous advantages in terms of customer loyalty, revenue stability, and business growth. According to Research & Markets, the global subscription e-commerce market was valued at US$96.61 billion in 2022 and forecasted to grow to US$2419.69 billion by 2028 at a CAGR of 71%! That’s some crazy growth! Even if it’s hard to believe, it’s likely that subscription e-commerce will continue to grow and that you as merchants can’t afford to ignore the opportunity.
- What is a Shopify subscription service offering?
- What are the benefits of the subscription model to merchants?
- How to Start a Shopify Subscription Business?
Choosing the Right Subscription App for Your Shopify Store & Recommendations.
1. What a Shopify subscription service offering?
Subscription ecommerce businesses give online customers an easy, tailored, and less expensive option to make repeated purchases of the things they want and need. Subscriptions can be a tool that gives benefits to customers and merchants. For customers, it supports increased flexibility looking to repeat purchase high frequency products that could be food & drink or skincare / beauty subscription boxes. Subscriptions may increase price affordability for the customer through subscription discounts, and also helps convert one-time shoppers into recurring customers of your website and increase consistency of sales. There are three common subscription models:
Curation where merchants curate a box of one or more products packaged together (clothes, make-up, curated coffee or snacks) and ships it to customers at a regular cadence. This is the most popular subscription model with ~55% of subscriptions being of this type. What are the benefits and what’s the catch? While it offers a sizable growth opportunity, it requires some effort to curate items every month for example. If customers don’t like the curated bundle, you may see higher churn. Curated boxes may also have higher packing and delivery expenses.
Verve Coffee runs a curated subscription that lets customers opt from having a curated box of coffee sent to them, or lets customers choose from unique coffee beans sourced by the Verve team.
Replenishment – This is where merchants periodically send the same product to customers. Also referred to as “subscribe-and-save”, it works best for consumables products that are used with high frequency like skin creams, snacks, razors and so on. About 32% of subscriptions are replenishment. What are the benefits and what’s the catch?
Replenishment products tend to have higher conversion, and higher retention rates but may require compelling prices to attract customers. This may impact margins if your volumes don’t scale up sufficiently.
Dollar Shave Club is one of the most well-known subscription company examples. The brand has built a billion dollar brand on replenishment subscriptions sending customers a regular delivery of razor blades straight to their doorstep.
Access - The third and fastest-growing subscription model, an access subscription is used to offer customers access to gated content, discounts, exclusive products or member perks. This model is multiplying because of the wide variety of benefits merchants can offer their subscribers like discounts and rewards, and additional content for customers who pay more. What are the benefits and what’s the catch? The access model helps with customer loyalty and offers you to monetize the loyalty to create product bundles that allow upsells and increase AOV. However, it requires you to commit to investing time and money to build a differentiated product and value to your access subscription members.
Joshua tree coffee gives its customers bundled discounts and benefits.
2. What are the benefits of the subscription model to merchants?
Enhancing Customer Retention and Loyalty:Given how much effort goes into acquiring a customer, it makes sense to try to hold on to them. By offering subscription-based products or services, merchants can cultivate long-term relationships with their customers. Subscribers tend to have higher customer lifetime value (CLTV) and lower churn rates compared to one-time buyers.
Subscriptions foster a sense of community among customers, creating a shared experience and a platform for engagement and enable Shopify merchants to gather valuable customer data, allowing them to tailor their offerings and marketing strategies to individual preferences enhancing the overall customer experience. This helps foster a loyal customer base.
Revenue Stability and Growth:Subscriptions offer an inherently scalable revenue model. As the subscriber base grows, the revenue scales proportionately without the need for significant additional marketing efforts or customer acquisition costs. Due to the multiple touch points in a subscription relationship with the customer, there are more avenues for upselling and cross-selling products or upgrading them to higher-tier subscription plans. It also provides a recurring, less volatile and more predictable revenue stream unlike traditional one-time purchases that may show spikes and dips through the year. This helps in financial planning and allows improved operational efficiency. An example of this is how it allows better inventory management reducing the risk of stock-outs or overstocking and simplifies decisions to make strategic investments in infrastructure, technology, and personnel to support growth.
Enhanced Customer Acquisition and Marketing:Having a stable customer base takes a lot of pressure off the customer acquisition race and reduces the need for continuous customer acquisition efforts. With a stable subscriber base, merchants can allocate their resources to retaining existing customers and maximizing customer lifetime value, rather than constantly focusing on acquiring new customers.
Subscriptions generate a wealth of data that can be utilized for informed decision making giving valuable insights into customer behavior, preferences, and market trends. It encourages brand advocacy among customers. Satisfied subscribers are more likely to share their positive experiences with others, driving word-of-mouth referrals and organic growth. Merchants leveraging this can improve conversion rates in each customer segment and improve marketing ROI.
3. How to Start a Shopify Subscription Business?
Choose whether subscriptions are right for you and then choose the subscription model. Build out customer personas and understand why they would want to buy a subscription product. This will help you decide which products you want to offer under subscription and to which customers. Replenishment subscriptions are better suited for products that are consumed periodically. If you want to provide a personalized experience, a curation subscription might be the best bet, but if you’d rather offer loyal customers an extra special reward, you might choose an access model instead. Consider a hybrid approach where you offer the product on an outright sale basis and on a subscription sale. This may help evaluate the subscription model and also cater to customers who want to get a product every month while allowing someone to try buying an item as a one-off.
Plan and get ready for subscriptions:
A subscription business model requires you to change the way you do things. How do you record subscription customers and their purchases. Are your logistics, merchandising and shipping process ready to support recurring purchases? Do you have automated email or SMS flows to communicate repeated purchases to customers and allow them to skip or add one-time products or cancel their subscription? If not, there is work that must be done.
Decide on your subscription pricing:
Analyze competition and what you are offering to subscribers to decide on pricing. It often is highly recommended to have a discount to attract replenishment subscribers whereas access or curation subscribers may even pay up for the value added service.
Choose a subscription app from the Shopify app store:
Shopify supports the subscription model through apps. While Shopify has built the rails on which all of these apps work, the apps do a lot of the heavy lifting like managing the UI and dashboard, setting up products for subscriptions, managing your subscriber information’s, email flows, etc. is done by apps. However, if you need further guidance on step-by-step process, you can go to the The next section talks about choosing the right app and what are some of the features you need to look for.
3. Choosing the Right Subscription App for Your Shopify Store & Recommendations.
Selecting the right subscription app for your Shopify store is a crucial decision that can greatly impact your business's success. With numerous subscription apps available, it's essential to consider key factors to ensure you choose the app that best aligns with your specific needs and goals. Here is a guide on how to choose a subscription app for your Shopify store, covering important considerations and steps to make an informed decision.
1. Define Your Subscription Requirements:It's vital to first define your subscription requirements so that you can decide which app is right for you. Consider the following aspects:
Determine whether you need a product subscription, membership subscription, access subscription, or a combination of these.
Identify the billing models you require, such as recurring billing, prepaid subscriptions, gifting subscriptions or one-time purchases.
Assess the level of customization you need for subscription plans, pricing tiers, intervals, and product combinations.
Consider any specific integrations you require with other apps or tools, such as inventory management or email marketing platforms.
Analytics and Reporting:
Determine the level of analytics and reporting capabilities necessary to track subscription performance, customer behavior, and revenue trends.
2. Research and Evaluate Subscription Apps:
Conduct thorough research to identify subscription apps that meet your requirements. Consider the following factors during your evaluation.
Review the features offered by each subscription app, such as easy setup, customization options, billing flexibility, automation capabilities, and integration possibilities. The work you have done in step 1 will drive what features are important to you.
User Interface and Ease of Use:
Assess the user interface and user experience of the app. Look for an intuitive and user-friendly design that aligns with your team's technical expertise.
Investigate the level of customer support provided by the app's developers or the app marketplace. Consider their responsiveness, availability, and support channels (e.g., live chat, email, or phone).
App Reviews and Ratings:
Read reviews and ratings from other Shopify merchants who have used the subscription apps you're considering. Look for feedback on app performance, reliability, and customer satisfaction.
Case Studies and Testimonials:
Seek out case studies or testimonials from merchants who have achieved success using the subscription apps. This can provide valuable insights into real-world experiences and outcomes.
Evaluate the pricing structure of each app, considering factors like monthly fees, transaction fees, and any additional costs for advanced features or scaling options. Compare the costs against the value and benefits offered by the app.
Ease of Installation and Setup:
Assess how straightforward it is to install and configure the app within your Shopify store. Consider the time and effort required for implementation.
Test the app's user interface and features to ensure it aligns with your team's workflow and provides a seamless experience for both you and your customers.
Evaluate the app's performance in terms of speed, responsiveness, and stability. Ensure it doesn't slow down your website or negatively impact the customer experience.
Verify that the app integrates smoothly with your existing Shopify store and any other necessary third-party apps or tools.
Test the app's subscription management features, such as managing billing cycles, handling renewals and cancellations, and customer communication.
Subify Subscriptions App:
Free plan available with a 14-day free trial and then additional charges of 99$ a month may apply. Its has a 4.9 star rating with 150 plus reviews. Simple subscriptions app for recurring payments, subscription boxes, memberships, and abonnements.
Key Features: Customizable & various widget templates that fit perfectly in your store | Quick setup and Auto-adding widget. Embed app to use directly in Shopify admin | Seamless customer portal to manage their subscriptions. Skip, pause & cancel | Powerful and knowledgeable support team that responds in less than 1 minute | Expert customer success managers help you with subscription setup, marketing, etc.
Recharge Subscriptions :
From $99/month, 30-day free trial and then additional charges of 499$ a month may apply. It has a 4.6 star rating with 1300 plus reviews.
Key Features: Customer Portal - Customize the interface of the store's customer portal | Robust and Flexible API - Fully customize your subscription experience | Bundles - Leverage Bundles for cross-sells | Integration: Take advantage of turnkey integrations that’ll connect your tech stack.
Recurpay: Subscriptions App :
Free to install and then additional charges 9$ a month may apply. It has a 5 star rating with 250 plus reviews.
Key Features: Seamlessly migrate from other subscriptions apps with quick live chat support , Robust APIs - Build a subscription flow in your custom mobile app, online store or blog | Supports multicurrency subscription | Supports both one-time & subscription purchase together | Let customers edit, reschedule & cancel subscription from customer portal | Offer discounts, free shipping on subscriptions.
Free plan available, 10-day free trial and then additional charges upto 100$ a month may apply. It has a 4.9 star rating with 2000 plus reviews.
Key Features: Sell regular and prepaid subscriptions with free trial | Build a box, offer tiered discounts| Custom shipping, gifts, and more with loyalty features | Maximize ROI with upsells| Bundling | Bulk automation | retention tools | 24x7 customer support.
Seal Subscriptions℠ & Loyalty :
Free plan available. 30-day free trial and then additional charges upto 20$ a month may apply. It has a 4.9 star rating with 700 plus reviews.
Key Features: It gives you full control over your subscribers, products, discounts, churn rate, cancellations with a great support team behind it to help you.| It offers sell classic & prepaid subscriptions, with discounts, free trial | Your customers can easily access subscriptions with magic links, | All loyalty features, | Multi-lingual and 24x7 customer support.
Subscriptions have emerged as a powerful tool for Shopify merchants, revolutionizing the way they do business. Furthermore, subscriptions enable merchants to optimize their inventory management, scale their operations efficiently, and reduce customer acquisition costs. Through targeted marketing strategies, brand advocacy, and data-driven decision making, Shopify merchants can leverage subscriptions to drive business success. As the e-commerce industry continues to evolve, subscriptions will remain a vital component of the Shopify ecosystem, empowering merchants to thrive in the digital marketplace.