CEO of Carthook, a popular Shopify plugin that provides ability for store to offer upsells in checkout, has before starting this company ran an online store business for which he famously said “If I was starting my online store again, I would insist with my partners that we sell everything as a subscription”.
Subscriptions provide a steady revenue stream, lower advertising cost, and higher life-time value (LTV) per customer. It’s a retailers’ dream. Not everything can be sold as subscription though, but many things can. Sometimes, even non-obvious products, like fashion, can be made into subscription. There are a few companies out there, that will send you each month a box of curated picks that you can keep or return but you pay a fixed monthly subscription fee to receive that box. Necessities, like medication, cleaning supplies, personal hygiene products, coffee, and many other consumables that you replenish at a regular frequency, are all good candidates for subscription.
Stores that offer subscriptions range from simple to complex. Some products can be even offered as one time or subscription for an appropriate discount. Toothpaste may be an example of a simple subscription. It requires no more that a checkbox and a dropdown to select delivery frequency. Recharge payments and bold both provide apps that work on Shopify and can be configured in an hour or less for a simple product like toothpaste.
Other subscriptions are more complex. One Keurig coffee pods maker allows buyers to create a custom-made box with different coffee flavors. To fill and later edit the box requires custom development. The company however found the cost of development to be well worth it because now they are selling many more coffee pods.
There are some unique subscription strategies that further increase store’s revenue. For example, an average subscriber cancels subscription in 3 months or less. If you let them prepay at 20% discount for the whole year, they will stick longer. Another good strategy is Trial to Subscription conversion. Let buyer buy a sample at much reduced price and if they don’t cancel, it will convert to subscription at full price.
To summarize, online subscription stores make often more money due to lower customer acquisition cost, higher customer LTV (lifetime value), and more predictable cash flow and revenue.
For more information or consultation for your type of business, feel free to send me a note.
