Use subscriptions to retain customers and improve revenue

Use subscriptions to retain customers and improve revenue

3 min read

There are many benefits to offering subscriptions in your ecommerce store. It provides financial and inventory predictability to your business and helps retain customers. Shoppers benefit from the convenience of repeat orders along with discounted products and services.

The subscription ecommerce market is expected to grow by 68% between 2019 - 2025, according to a report by UnivDavos Market Insights.

But what exactly are subscriptions and how do you know if it is right for your business?

What is a subscription model?

The subscription model offers customers a regular product or service at a recurring fee.

Subscriptions take many forms. Replenishment subscriptions provide a recurring delivery of consumable products like food, groceries, or toiletries. Access subscriptions require customers to buy a membership to access a company’s products, usually at a significant discount. A curated subscription service provides products based on a customer’s unique needs. This may include clothing, toys, gadgets, or even TV shows.

The terms ‘subscription’ and ‘auto-shipping’ are often used interchangeably. Auto-shipping automates procedures by integrating software, or other technology and infrastructure with your store.

What are the benefits of subscriptions?

There are several benefits to offering subscriptions in your store. The ongoing relationship with individual customers allows businesses to offer personalized service which fosters brand loyalty. This ensures higher customer retention rates.

It means you can focus on repeat revenue opportunities from individual customers, and it provides you with an existing market to which you can introduce new products. Overall, it increases customer lifetime value.

A subscription model can significantly improve logistics. It makes inventory management easier and adds predictability to financial and inventory forecasts. This model adds a level of security to a business by establishing a consistent revenue stream.

Most businesses offer a discount to customers who purchase a subscription. Customers benefit from the convenience of receiving a product or service that they need regularly, without having to complete a new transaction each time. It assists them with budgeting, and, for some, is a way to discover new or unique products.

Both auto-shipping and subscription services contribute to supply chain efficiency. Automating certain processes saves time and resources, improving productivity. It helps your business to fulfill more orders and process them faster. Auto-shipping removes manual processes – freeing staff up to fulfill other important functions – reducing human error.

Using ReCharge for subscriptions

autoship subscriptions

Above is an example of auto-shipping subscriptions via ReCharge on our client's website, Small Pet Select.

At the time of writing this, Shopify doesn’t currently offer subscription services, although it may introduce a basic subscription offering soon. For now, you will need to use a subscription app and manage your subscriptions in the Shopify admin.

ReCharge is ShopCreatify’s go-to ecommerce subscription app. It handles recurring billing so that merchants can sell and manage repeat orders on one platform. Use ReCharge to customize delivery and cut-off dates, do inventory forecasting, and manage orders.

Customers can choose which products they want to subscribe to. They can also choose the frequency of their subscription, be it weekly, fortnightly, or monthly. The app redirects customers to ReCharge’s payment processing page when they go to checkout. On top of that, customers can manage their subscriptions easily by using the customer portal in the store.

ReCharge also asks customers who cancel their subscriptions to provide a reason for their leaving. This helps merchants understand why customers are unsubscribing so that they can improve their products or services accordingly. Merchants can use ReCharge to offer customers incentives to continue their subscriptions.

One of our clients that uses ReCharge is Small Pet Select. Their customers receive a 5% discount for subscribing and they can select the frequency of their delivery, with options ranging from between two to 16 weeks.

Bold Subscription

Bold Subscriptions is another popular subscription app for Shopify and a strong competitor to ReCharge. Similar to ReCharge, the app doesn’t use Shopify’s checkout and it also has a customer portal to manage subscriptions.

Bold has an option for prepaid and gift subscriptions. It can be customized to match your site’s design and branding. The app also provides inventory forecasting so that merchants can fulfill upcoming subscriptions.

Conveniently, customers shopping on stores that use Bold can purchase one-time and subscription products in a single transaction.

Should I use a subscription model?

There are several things to consider when deciding whether to offer a subscription service. What type of subscription model do you want to use? Will you be changing your subscription options regularly, for example, each season? How important are subscriptions to your business model? How customized do you want the customer portal to be?

If you want a better understanding of how subscription apps work and if your business is suited to it, you can get in touch with ShopCreatify. We work with subscription apps all the time and can advise Shopify merchants on their options.

Masthead photo by MealPro

Gabi Falanga
Gabi Falanga

Hi, I’m Gabi, a communication specialist who loves writing about interesting topics. Follow me for more information.