A growing number of emerging brands are are integrating subscription commerce into their business models. A wide range of SKU brands offer subscription options, including beverage brands like Waka Coffee to Crated with Love, which sells games to help couples connect. As many as 75 percent of DTC brands will have a subscription-based offering by 2023, according to a new report from PipeCandy and Rodeo.
When customers pay a recurring fee to receive products on regular basis, it benefits both brands and customers in a variety of ways, including an increase in customer loyalty, increasing average order value, customer lifetime value, lower customer acquisition costs and providing more predictability to manage inventory.
“At Waka, we are all about making our customers’ life just a bit easier,” says founder David Kovalevski. “We want to make it super easy and convenient for them to purchase our products. Our customers can purchase our products as a one-time order or subscribe and save if they choose to do so.”
To incentive customers to subscribe, Waka offers a discount off the regular price, and enables customers to manage their accounts on the website.
Digital acquisition costs are up 222 percent over the past eight years proving the importance of doing everything that you can to improve your customer retention. And subscriptions are a way to do both to do that as highlighted by recent Shopify research. A recent report says that you have between a 60-70 percent chance of selling to an existing customer versus only a 5-20 percent chance of selling to a new prospect.
Additionally, eCommerce Fuel found that eCommerce brands that offered subscriptions grew 26 percent faster and were 14 percent more profitable than those brands that didn’t offer subscriptions. They also found that brands that offered subscriptions see about 30 percent of their monthly income derived from subscriptions which in today’s uncertain environment is super important to have a steady pillar of income coming in each month.
Cohen spoke to SKU about the benefits of subscription-based eCommerce to emerging brands and the logistics of adding a subscription model.
From Razors to Coffee
SKU: Tell me what kinds of brands benefit most from having subscription options?
Cohen: Any brand can offer a subscription. But typically brands that offer products that need to be replenished or reordered on a regular basis (i.e. a consumable product or a personal care product) do well in the subscription space.
Classic examples of products that do well with subscriptions include coffee, razors, and skincare items. These types of products are used/consumed on a regular basis. And by offering a subscription a brand will be able to offer their customers the convenience of receiving these products on an ongoing basis without them needing to go online and place a reorder for the items every time they need them.
What types of subscription options are available?
Cohen: Typically, subscriptions come in three different forms:
Under a replenishment ecommerce subscription model, you will be enabling customers to purchase the same item(s) on a recurring basis. Items that would be good for a replenishment model include coffee and other food & beverage items (both human and pet related), razors or health and beauty items.
A curation subscription model means that the subscription is geared towards a specific customer or category. For example, it could be a “fun sock of the month” subscription or a subscription tailored towards fitness items that are sent to you every selected period (i.e. 30, 60 or 90 days). You generally see a lot of curation subscription businesses offer “subscription boxes.”
With a special access subscription model, subscribers pay a certain fee to gain access to a particular sale or to gain early access to new products. This type of subscription model is common in the fashion and apparel industry as well as the fitness space.
SKU: Do you have any stats on how subscriptions can increase customer retention rate and grow your business?
Digital acquisition costs are up 222% over the past eight years proving the importance of doing everything that you can to improve your customer retention. And subscriptions are a way to do both to do that as highlighted by recent Shopify research. A recent report says that you have between a 60-70% chance of selling to an existing customer versus only a 5-20% chance of selling to a new prospect.
Additionally, eCommerce Fuel found that ecommerce brands that offered subscriptions grew 26% faster and were 14% more profitable than those brands that didn’t offer subscriptions. They also found that brands that offered subscriptions see about 30% of their monthly income derived from subscriptions which in today’s uncertain environment is super important to have a steady pillar of income coming in each month.
Getting what they need when they need it
SKU: Can you please share a case study of one of Upscribe’s customers?
Cohen: RYZE Superfoods powers their subscription business with Upscribe. They have leveraged Upscribe in a number of ways, as detailed by co-founder Rashad Hossain. As Rashad highlights, Upscribe has allowed RYZE to:
- Remove the friction for subscribers to get what they need, when they need it. This has helped customer retention. Subscribers don’t need to write into support and wait for support for them to get back to them about modifying or canceling their subscription.
- Increase AOV and LTV (and save money) by natively offering upsells at checkout without needing to pay a third party app.
- Gather valuable insights and reduce churn by enabling nested cancellation flows to block churn. .
SKU: Can you tell me about Upscribe and the services you offer?
Upscribe helps fast-growing Shopify brands like Athletic Greens, and True Botanicals and others take their subscription and retention business to the next level. Upscribe makes it simple for brands to:
- Deliver a powerful customer experience that drives customer loyalty.
- Dramatically reduce churn.
- Free migration to Upscribe (if you are currently running subscriptions on another platform).
- Capture reorders from customers that don’t want to be locked into a subscription in as little as a single click.
than our competitors.
If you are new to the idea of subscriptions, explore our ROI calculator to see how much revenue and profit you could be capturing if you enable subscriptions for your business.
Upscribe is waiving two months of the monthly software fee for any new SKU brand that signs up. Just mention that you are from SKU to our sales team if you reach out for a demo.