To succeed in subscription commerce, you need to have a clear understanding of your target audience and offer high demand products or services that meet the needs and preferences of that audience. You also need to have efficient business systems in place to manage recurring billing, recurring payments, omnichannel order fulfillment, and customer service.
This article explores what is subscription billing commerce and top features of subscription eCommerce for wholesale businesses. Let’s get started!
What is Subscription Commerce?
Subscription commerce, also known as recurring billing or subscription-based model, refers to a business model where a customer pays a subscription fee to receive a product or service on a recurring basis. Some examples of subscription-based businesses include magazine subscriptions, streaming services, meat box subscription, baking subscription box, and software as a service (SaaS) companies.
According to a report by McKinsey & Company, the subscription eCommerce market has grown by more than 100% a year for the past five years, and reached up to $15 billion in 2020. The report also found that the subscription model is particularly popular among millennials, with 72% of subscribers being under the age of 44.
Subscription commerce incorporates recurring billing, automated billing, and subscription management billing models. This can include monthly or yearly subscriptions for physical goods, such as clothing or household items, or digital services, such as streaming platforms or online content.
The goal of subscription commerce is to create a long-term relationship with the customer and generate recurring revenue. This model has become increasingly popular in recent years due to the convenience and value it offers to customers.
Some other trends and statistics that may continue to shape the subscription commerce industry in 2023 include:
- Increased adoption of e-commerce and online subscriptions: The COVID-19 pandemic has accelerated the shift towards online ordering and subscriptions, and this trend is expected to continue in 2023. According to Statista, the global eCommerce market is projected to reach $4.9 trillion in 2021, with subscription-based models contributing significantly to this growth.
- Rise of personalized and niche subscriptions: Consumers are increasingly looking forward to eCommerce personalization campaigns and curated omnichannel marketing experiences, and this trend is expected to continue in 2023. Subscription companies that offer tailored and specialized products or services are likely to see more success.
- Growth of the wellness and sustainable eCommerce sectors: Subscription models in the wellness and sustainability sectors, such as monthly delivery of organic produce or eco-friendly products, are expected to see significant growth in 2023 as consumers prioritize health and sustainability.
- Increased competition: The subscription commerce industry is becoming increasingly crowded, with new players entering the market every day. Companies will need to differentiate themselves and offer compelling value to stand out in this competitive environment.
- Growing importance of customer experience: In 2023, companies that prioritize omnichannel customer experience and provide excellent eCommerce customer service are likely to see success in the subscription commerce industry. This includes offering flexible billing options, easy cancellation policies, and responsive customer support.
Subscription Commerce For Wholesale Distributors
Wholesale distribution companies can leverage subscription commerce as a way to create a recurring revenue stream and build long-term relationships with customers. Here are some potential ways that wholesale distributors can implement subscription commerce:
- Offer a subscription service for regularly used products: Wholesale distributors can create a subscription program for customers to receive a set of regularly used products on a regular basis, such as monthly or quarterly.
For instance, a wholesale coffee beans company can create monthly coffee subscription boxes for their white label coffee line. This can be a convenient and cost-effective solution for customers, and it creates a predictable revenue stream for the distributor.
- Sell subscriptions to online content or tools: Wholesale distributors can create online content or tools that are only accessible to subscribers, such as industry news, market trends, or product training materials.
Restaurant business owners or restaurant food distributors can sell a secret recipe book, or offer the best baking subscription boxes. This can be a valuable offering for customers and a source of recurring revenue for the distributor.
- Offer a subscription-based delivery service: Wholesale distributors can offer subscriptions for regular delivery of bulk quantities of products to their customer. For instance, restaurant wholesale suppliers can offer subscription-based delivery for wholesale restaurant supplies. In turn, restaurants receive a consistent supply of products without having to place frequent orders.
This can be a convenient and cost-effective solution for customers and create a predictable revenue stream for the distributor. It will be easier to accomplish this when you integrate a wholesale delivery management system.
- Bundle products into subscription packages: Wholesale distribution companies can create subscription packages that include a variety of products that are relevant to a particular customer segment, such as a package of wholesale candy for a candy dropshipping company. This can provide value to the customer and create a predictable revenue stream for the distributor.
What is Subscription Model in eCommerce?
In the b2b eCommerce context, subscription models are often facilitated through online platforms or websites. Customers can sign up for a subscription on the company's website and receive the product or service regularly, often at a discounted rate compared to one-time purchases.
Subscription models have become increasingly popular in recent years due to the convenience and value they offer to customers. They allow customers to receive regular deliveries of products they need or enjoy without having to place separate orders each time. Additionally, subscription models often offer exclusive deals and discounts to subscribers, which can drive customer loyalty.
The subscription commerce business model is a way for companies to sell products or services on a recurring basis, typically through a subscription service. Customers pay a regular fee to receive the product or service on a regular basis, such as monthly or yearly.
There are several types of subscription models, including:
- Physical product subscriptions: This type of subscription involves the delivery of physical products, such as clothing, household items, or food, to the customer on a regular basis.
- Digital product subscriptions: This type of subscription involves the delivery of digital products or services, such as streaming platforms, online content, or software, to the customer on a regular basis.
- Hybrid subscriptions: This type of subscription involves the delivery of both physical and digital products or services to the customer on a regular basis.
The subscription commerce business model is attractive to companies as it allows them to generate a consistent stream of revenue and build long-term relationships with customers. It is also convenient for customers as it allows them to receive a regular supply of products or services without having to remember to place orders.
However, companies must be careful to offer value to customers and provide excellent service to retain subscribers and avoid high churn rates.
6 Features of Subscription Commerce Business Model
The subscription commerce business model allows companies to build long-term relationships with customers and generate consistent revenue streams, while also providing value and convenience for customers.
Here are six key features of the subscription commerce business model:
- Recurring revenue: The primary feature of the subscription model is the ability to generate recurring revenue from customers through regular payments. This provides a consistent stream of income for the company and allows them to more accurately forecast their revenue.
- Customer retention: Subscription models encourage customer retention by building long-term relationships with customers. Customers who subscribe to a product or service are more likely to continue using it on a regular basis, leading to higher retention rates.
- Convenience: Subscription models offer convenience to customers by allowing them to receive products or services on a regular basis without having to remember to place orders. This can be especially appealing for products or services that are used frequently.
- Personalization: Many subscription models allow for some level of personalization, such as customized product bundles or personalized recommendations. This can increase customer loyalty and customer satisfaction.
- Upselling opportunities: Subscription models provide opportunities for companies to upsell additional products or services to their customers. This can help to increase revenue and customer satisfaction.
- Customer data: Subscription models provide companies with valuable customer data, such as purchasing habits and preferences, which can be used to improve the customer experience and drive sales.
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Subscription Revenue Model in eCommerce
There are several benefits to using a subscription revenue model in eCommerce. For customers, the convenience of having products or services delivered on a regular basis can be appealing, and the ability to pay for those products or services on a recurring basis can make budgeting easier.
On the other hand, for businesses, the subscription model can provide a predictable and stable source of revenue, as well as an opportunity to build long-term relationships with customers.
To implement a subscription revenue model in eCommerce, a business will need to set up a system for collecting recurring payments from customers. A payment processing software, such as BlueCart Pay, or online payment gateway will come in handy.
The business will also need to decide on the terms of the subscription, including the frequency of payment and the length of the subscription. In addition, you will need to have a system in place for order management and order fulfillment.
There are a number of tools and technologies available to support subscription commerce in eCommerce. These can include:
- Subscription management software: This type of software is used to manage the billing and payment process for subscriptions, including handling recurring payments and dealing with issues such as cancellations and account changes.
- Customer relationship management software: Wholesale CRM software can be used for customer relationship management, customer experience management, and to manage customer interactions, and data throughout the customer lifecycle, including tracking customer activity and preferences, and providing personalized recommendations.
- Fulfillment and wholesale delivery management software: This type of software is used to manage the process of delivering products to customers, including tracking inventory and managing shipping and handling returns.
- eCommerce marketing automation software: This software can be used to automate eCommerce marketing tasks such as eCommerce email marketing campaigns and social media marketing, helping businesses to effectively reach and engage with their target audience.
- eCommerce Analytics and reporting tools: These tools can be used to track key performance metrics such as customer lifetime value, churn rate, and conversion rate, helping businesses to understand the effectiveness of their subscription offering.
Frequently Asked Questions About Subscription Commerce
Here are some frequently asked questions about subscription eCommerce.
How Does the Subscription Business Model Work?
In the subscription business model, customers pay a recurring fee, typically on a monthly or annual basis, to access a product or service. The fee may be charged automatically, such as through a recurring payment with a credit card, or it may be invoiced to the customer on a regular basis.
What are Some Examples of Products or Services That are Often Sold Using the Subscription Model?
Some common products and services that are sold using the subscription model include streaming content (such as movies and TV shows), software, magazines, and physical products such as wholesale produce, wholesale seafood, wholesale meat, wholesale groceries or household goods.
What are the Benefits of the Subscription Business Model for Businesses?
The subscription business model can provide a predictable and stable source of revenue for businesses, as well as the opportunity to build long-term relationships with customers. It can also help businesses to better understand their customers' needs and preferences, and to develop new products or services based on this information.
What are the Benefits of the Subscription Business Model for Customers?
For customers, the subscription model can offer convenience and flexibility, as they can have products or services delivered to them on a regular basis without having to remember to place an order. It can also make budgeting easier, as customers can pay for products or services on a recurring basis rather than all at once.
How can Businesses Successfully Implement a Subscription Business Model?
To successfully implement a subscription business model, businesses need to have a clear understanding of their target audience and offer products or services that meet the needs and preferences of that audience. They also need to have strong systems in place for managing recurring payments, fulfillment, and customer service, and use marketing and analytics tools to effectively reach and engage with their customer base.