Create your own ecommerce website and start selling successfully with ShopWired today

Create your ecommerce website on ShopWired today.
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Create your own ecommerce website and start selling successfully with ShopWired today

Create your ecommerce website on ShopWired today.
Start today with 14 days free

How To Start A Subscription Business

25th April 2024

Person tying a bow on a packaged 'Subscription Box'

Every ecommerce owner understands the importance of repeat customers. In fact, research has shown that improving customer retention by just 5% can increase profits by 25%. 

But what if there was a way to guarantee a customer returns rather than being just a one-time purchaser? 

A subscription-based business might just be the solution. 

Subscription services have grown in popularity in recent years. Netflix, Prime, Spotify—the list goes on. You’re probably subscribed to at least one of these yourself. But entertainment isn’t the only avenue for subscriptions. In the ecommerce world, many subscription-based business ideas are waiting to be explored, each offering a continuous, predictable stream of revenue to keep your business thriving.

In this guide, we’ll explore everything there is to know about subscription-based services, including the benefits, different types of subscription models and how you can set up a subscription-based business on ShopWired. 

Ready? Let’s go. 


What Is an Ecommerce Subscription Business Model?

An ecommerce subscription business model involves customers regularly paying a fee, either monthly or annually, to access or receive products or services.

The subscription-based model is adaptable to many types of products or services, making it a solid option to explore for various industries. Whether you're offering physical goods, digital products or access to exclusive content, this model can be customised to suit your business-type.

In recent years, subscription-based services have become popular as merchants seek ways to ensure steady revenue and build solid customer relationships. 


Understanding Different Types of Subscription Business Models

Subscription business models can be broadly categorised into three types: 

  • Curation 
  • Replenishment 
  • Access 

Choosing the best subscription model for your business will depend on the nature of your products/services, and your target market.

1. Curation Subscription Model

Open subscription box with styro foam packing

The curation model provides personalised experiences by curating products that align with the customer's tastes and interests. Curated subscriptions often come in the form of subscription boxes, which deliver a selection of themed items designed to surprise subscribers each cycle

A good example of a subscription box business is FabFitFun. Every three months, subscribers receive a box filled with 6 on-trend lifestyle items that are themed for each of the four seasons: Spring, Summer, Autumn and Winter. FabFitFun’s products encompass fashion, beauty, wellness, home, tech and fitness. Subscribers can pay for an annual subscription at $54.99 per box. 

This model likely increases FabFitFun’s revenue as it capitalises on the allure of discovery and the excitement of receiving new, unexpected items. Customers might be hesitant to purchase 6 individual products every few months, but packaging these as a specially curated box creates an appealing experience that encourages sign-ups.

Curation Subscription Model Pros

Enhanced customer engagement: Curated boxes create a sense of anticipation and excitement, making each delivery an event in itself. This can increase customer satisfaction and loyalty.

Higher perceived value: The element of surprise and the delivery of curated, often exclusive items can make the box seem more valuable than the sum of its parts.

Marketing through word-of-mouth: Customers delighted by their curated packages are more likely to share their experiences on social media, attracting more subscribers.

Curation Subscription Model Cons

Subscription fatigue: Receiving a curated selection of items is exciting, but customers may feel overwhelmed by the abundance of items over time, which could lead to cancellation. 

Variable customer satisfaction: The surprise element means that not every item will always meet every subscriber's taste, an issue which could lead to dissatisfaction and potential returns.

What type of business is it good for? 

Curation models thrive on the "surprise and delight" factor. This subscription model is well-suited to sectors like fashion, beauty and food, where personal taste and discovery are key drivers of customer satisfaction.

2. Replenishment Subscription Model 

Delivery man delivering groceries to door

Designed for convenience, the replenishment model ensures customers never run out of necessary supplies. In this model, subscribers receive products on a regular, predetermined schedule, eliminating the need to remember to reorder. It's particularly effective for commodities like toiletries, groceries or pet food.

Examples of the replenishment model include Dollar Shave Club, which delivers razors and other grooming products directly to subscribers at intervals to ensure they never run low on essential grooming supplies. Similarly, Blue Apron provides meal kits with pre-measured ingredients and recipes, delivered weekly, making it easy for subscribers to cook fresh, chef-designed meals at home without the hassle of meal planning and grocery shopping. 

The replenishment model helps prevent customers from turning to competitors when they need a quick replacement. By ensuring regular deliveries, businesses can reduce the chances of customers purchasing from local stores or alternative suppliers by guaranteeing that they come back.

Replenishment subscription model pros

Customer retention: Convenience reduces the likelihood that customers will shop around, thus helping to maintain your customer base.

Consistent demand and revenue: Regular deliveries mean steady income and more predictable stock management. 

Streamlined shopping experience: Automating the reordering process for essentials spares customers the effort and time associated with repeat purchases.

Replenishment subscription model cons 

Subscription cancellations: Customers might cancel subscriptions if they feel overstocked or if their usage patterns change.

Limited upselling opportunities: With routine orders predominantly focused on necessities, there might be fewer opportunities to introduce new or premium products.

Customer sensitivity to price changes: Regular subscribers may be more alert to price adjustments, which can affect retention if not managed carefully.

What type of business is it good for? 

Replenishment models are perfect for businesses that sell consumable goods that require regular replacement or restocking. It suits customers who value convenience and want to minimise the time spent shopping for everyday items.

3. Access Subscription Model 

Subscribe button on website

Access subscription models provide ongoing access to products or services, creating a continuous customer engagement loop. Famous examples include Netflix and Spotify, which allow unlimited streaming of entertainment, while services like Adobe Creative Cloud offer professional software tools on a subscription basis. 

The access model isn't just for big names like Netflix and Spotify; it's useful for any business with a service or tool that customers need ongoing access to. Whether it's a software program, a learning platform or entertainment, the access model is a solid strategy for maintaining a steady, engaged user base and ensuring a consistent revenue stream.

One of the access model’s main appeals is that it can accommodate different user needs through tiered pricing plans. This flexibility allows businesses to offer more affordable options for users who need limited features, and more comprehensive, higher-priced plans for those requiring full access. This pricing strategy not only broadens the customer base but also enhances customer satisfaction by aligning service levels with user requirements.

Access subscription model pros

Flexibility: Customers can access services or content whenever needed, which boosts user convenience and satisfaction.

Scalable revenue options: Tiered pricing structures allow businesses to cater to different levels of need and budget. 

Continuous engagement: Regular updates and new content help keep the service fresh and engaging, encouraging ongoing subscriptions.

Access subscription model cons 

High dependency on content renewal: Continuous investment in new content or features is necessary to retain subscribers, which can be resource-intensive.

Risk of high churn rate: Subscribers might cancel if they feel they aren’t getting enough value from their subscription level.

What type of business is it good for? 

Access models are suitable for businesses that offer services or digital content that can be accessed over the Internet, particularly when new content or features can be regularly introduced to maintain high customer engagement and value. 


What Are The Benefits of Subscription-Based Business Models? 

People putting money into a piggy bank

Subscription business models offer several advantages that can significantly boost company growth and customer retention. Let’s take a look at the top five benefits of implementing a subscription model: 

1. Predictable Revenue Streams

Subscription models provide a consistent revenue stream. Knowing your revenue in advance can  enable more precise budgeting for marketing, product development and other operational expenses.

2. Improved Customer Loyalty

An open palm below a graphic to show customer satisfaction with smiley faces and stars

By engaging customers on a regular basis, subscriptions help develop deeper relationships. This continuous interaction can help foster loyalty as customers appreciate the convenience and personalised experience, making them more likely to remain with your service over competitors. Loyal customers can also become brand advocates, further boosting your business through word-of-mouth marketing.

3. Improved Inventory Management

With a clear view of the number of subscribers, businesses can optimise their inventory levels, reducing both overstock and stockouts. This can help cut costs, especially for products with limited shelf lives or those requiring specific storage conditions.

4. Data-Driven Insights

Subscription businesses accumulate a wealth of data on customer preferences and behaviours. This information is crucial for tailoring products and services to meet customer needs better, designing targeted marketing campaigns and developing new offerings that are likely to succeed. Leveraging analytics can transform customer insights into actionable business strategies.

5. Increased Customer Value

Subscriptions can increase the lifetime value of customers by providing ongoing revenue from the same customer base. Additionally, the model encourages upselling and cross-selling opportunities within the subscription experience. For example, exclusive deals or additions can be offered to existing subscribers, enhancing their experience whilst simultaneously increasing their expenditure.


How to Start Your Own Subscription Business

ShopWired Logo

If you're planning to launch a subscription-based business, ShopWired provides all the tools needed to get started. Here’s a step-by-step guide to help you: 

1. Choose Your Subscription Model

Decide on the type of subscription model that best suits your products and target market. Whether it’s a curation, replenishment or access model, this choice will influence how you structure your offerings and engage your customers. You might be starting a new subscription business from scratch or adding it as an addition to your existing products or services. 

2. Develop Your Subscription Model

Define what products or services you will offer. This might involve curating items for a niche, like a monthly gourmet snack box, or essential items like toiletries. Alternatively, you might offer a digital service, such as online courses, software tools or exclusive content.

3. Build Your Website

If you're starting your subscription business from scratch, the first step is to build a website. ShopWired provides all the tools you need to create the perfect online store for your subscription business. With extensive customisation options, plenty of free, responsive themes to choose from and a full suite of ecommerce features, ShopWired is the only solution you need to start a subscription-based business. 

With ShopWired, setting up subscription sales is straightforward. Simply download the free Subscriptions app to start selling products and services to your customers on a subscription basis. 

ShopWired subscriptions app

How the ShopWired's subscription system works:

In the admin system you can mark a product as a subscription product and set the price and billing interval (e.g. weekly, monthly):

ShopWired subscription product editor

When the product is viewed, a subscription tick box will now be visible. Products can be set up as subscription only, or as a separate option to subscribe & save rather than paying for a one-time purchase. 

ShopWired product page example with subscription option

Within the admin system, you can

  • View existing subscriptions and amend the address and customer information
  • Cancel an existing subscription
  • View orders processed through the subscription (in the same way as any other order)
  • Set a subscription date on the app installation page (if you want all subscription payments/orders to be processed on the same day of each month) - enter only a number between 1 and 28 here
  • Manually create subscriptions by creating an order which contains a subscription product

Within customer accounts, a customer can

  • View their active subscriptions
  • View individual details about a subscription
  • Cancel a subscription

**Important

The subscription system is only compatible with ShopWired Payments or the Stripe payment gateways. If you're not already using one of these gateways, you'll need to add one of these as a payment gateway on your account.

4. Market Your Subscription Business

Marketing graphic depicting someone drawing a marketing mind map

Once your website is set up, you'll need to craft an effective marketing strategy to attract and retain subscribers. Here’s how you can effectively promote your subscription business:

Identify your target audience: Understand who your potential subscribers are, including their interests, purchasing behaviours and demographics. This will guide your marketing efforts and help you craft messages that resonate.

Leverage digital marketing: Implement SEO techniques to improve your website’s visibility in search engine results. Create engaging content that highlights the benefits of your subscription service. Consider blogging about topics related to your subscription box, sharing customer testimonials and posting instructional content on how to use your products.

Utilise social media: Build a presence on platforms where your target audience spends the most time. Use social media for brand storytelling, live interactions and showcasing new offerings. Regular posts about box contents, behind-the-scenes processes and special promotions can engage potential customers and create anticipation.

Email marketing: Develop an email marketing campaign to connect directly with potential and existing customers. Send newsletters that inform subscribers about new features, products and special offers. Segment your email list to provide personalised content that meets the specific needs of different user groups.

Promotions and discounts: Introduce promotional offers such as discounts on first-time subscriptions or referral bonuses. Limited-time offers can create urgency and encourage sign-ups.

Track and adjust your strategy: Monitor the effectiveness of your marketing strategies through analytics. Track metrics like conversion rates, subscriber growth and engagement levels. Use this data to refine your approaches and implement A/B testing to determine what works best for your audience.

5. Customer Service and Support

Effective customer service is crucial if you want to retain subscribers and cultivate a positive brand image. Here's how to ensure excellent support in your subscription business:

Establish clear communication channels: Provide multiple ways for customers to reach you, including email, phone and live chat. Ensure your customer service team is well-trained and knowledgeable about your products and services.

Responsive support system: Implement a ticketing system to manage customer inquiries efficiently. Aim to respond to customer issues within 24 hours. Utilising automated responses for common questions can also enhance efficiency.

Subscription management tools: Allow subscribers easy access to manage their subscriptions through their user accounts. Features such as pausing, cancelling or changing subscription details should be straightforward.

Regular feedback loop: Encourage feedback through surveys and regular communication. Use this feedback to improve your products and customer service practices.

Educational content: Provide detailed FAQs, instructional videos and product guides. This helps in reducing the volume of common queries and improves customer satisfaction by empowering them to find answers independently.

By prioritising customer service and support, you ensure that subscribers have a positive experience, thereby increasing the likelihood of renewals and long-term loyalty.


Refining Your Subscription Service for Ongoing Success

To maintain a competitive edge and keep subscribers engaged, it's important to regularly refine and improve your subscription service. Continual assessment of how your service is performing and making data-driven adjustments is key for sustained success.

Begin by setting key performance indicators (KPIs) such as subscriber growth, churn rate, average revenue per user and customer lifetime value. These metrics are key for understanding your service's strengths and areas for improvement.

Leverage analytics to track customer behaviours and preferences. This data can reveal trends and patterns that will inform adjustments in your marketing, product development and customer service strategies. If you notice a particular area where subscribers are frequently dropping off, such as after the trial period, explore what could be improved to retain them.

Experimentation is also key. Test various aspects of your subscription model, like pricing tiers, promotional offers and delivery options, to see what best aligns with your customers' needs and preferences.

Lastly, actively seek and respond to customer feedback. This feedback can provide direct insights into subscriber satisfaction and expectations. Implement changes based on this feedback to not only enhance the service but also show your subscribers that you value their input, thereby increasing loyalty and trust.

By focusing on these aspects, you can fine-tune your subscription service to better meet subscriber needs and adapt to evolving market conditions, ensuring your business thrives over the long term.


Final Thought: Embrace A Subscription-Based Model for Continuous Revenue

Subscription business models offer a sustainable pathway to steady revenue and deepened customer relationships. Whether you choose a curation, replenishment or access model, these strategies can dramatically boost revenue your ecommerce business. 

By leveraging a platform like ShopWired, you can effectively manage and grow your subscription service, from initial setup and customer acquisition to ongoing management and optimisation. 


Subscription-Based Business - Frequently Asked Questions

1. How do I choose the right subscription model for my business?

Choose based on your product or service type and customer preferences. Curation is great for personalised goods, replenishment for essential items, and access for continuous services.

2. What are the key benefits of starting a subscription business?

Subscription models provide predictable revenue, enhance customer loyalty, offer opportunities for upscaling, and gather valuable customer data for business improvements.

3. How can I start a subscription business?

It's easy! Simply choose your subscription model, develop your offerings, build your website on ShopWired, market your service, and provide excellent customer support. ShopWired provides all the tools you need to get started.

4. How can I market my subscription business effectively?

Use targeted digital marketing strategies, leverage social media, engage in email marketing, offer promotions, and ensure your website is optimized for SEO.

5. What should I consider when setting prices for my subscription service?

Consider your cost, competitor pricing, perceived customer value, and financial sustainability. Test different pricing tiers to find what works best for your audience.

6. How can I reduce subscriber churn?

Maintain high product quality, offer excellent customer service, engage regularly with customers, and adapt your offerings based on customer feedback and behavior analysis.

7. Can I change my subscription offerings after launching?

Yes, it’s important to stay flexible and responsive to market changes and customer feedback. Regularly reviewing and adjusting your offerings is key to retaining subscribers and staying competitive.

8. What are some strategies for optimising the customer experience in a subscription business?

Enhance the customer experience by regularly updating your product offerings, personalizing communications, and simplifying the subscription management process. Listening to customer feedback and promptly addressing their concerns is crucial.

9. How do I handle logistics and fulfillment for a subscription business?

Partner with reliable fulfillment services that can scale with your growth. Automate as much of the shipping and handling process as possible to ensure consistency and efficiency.

10. What legal considerations should I be aware of when starting a subscription business?

Be mindful of consumer protection laws related to automatic renewals, cancellations, and refunds. Ensure that your terms of service and privacy policies are transparent and compliant with all applicable regulations.

11. How can technology improve my subscription business operations?

Invest in robust subscription management software that integrates seamlessly with your ecommerce platform. Automation tools can help streamline operations, from billing and renewals to customer relationship management.