Whether they’re purchasing their weekly groceries or topping up on their favourite vitamins, these days consumers demand a shopping experience that is convenient and easy. This is where subscriptions come in.
They take the hassle out of purchasing products on a regular basis. And more and more ecommerce businesses are taking note. In fact, the subscription ecommerce market is projected to reach $473 billion by 2025, making it an exciting opportunity for business owners looking to scale. Need more proof? Take a look at these 15 subscription-based brands on Shopify.
Here we deep dive into the benefits of recurring payments, the variety of subscription business models out there and how to get started with subscriptions on your Shopify store.
Why start a subscription business on Shopify?
An ecommerce subscription model offers customers a cost effective way of buying the products they want on a recurring basis. This can be the replenishment of the same items, such as razors, or the curation of new and surprise items.
So, how does a subscription business model benefit your Shopify store?
1. Increases Customer Lifetime Value (CLV)
Due to the recurring nature of subscriptions, they help to create a loyal fanbase of repeat customers easily. But keep in mind, with loyalty and retention, it all depends on customer experience and satisfaction. If a customer has a bad experience with your business, chances are they won’t be subscribing for long.
2. Predictive revenue
Subscriptions on Shopify make it easier to predict future revenue and forecast cash flow for other business expenses. This peace of mind is particularly handy if you’re a new startup with ambitions to grow quickly.
3. Streamlines shipping
The regularity of shipments streamlines your Shopify business’s fulfillment process and keeps costs consistent.
4. Lowers Customer Acquisition Costs (CAC)
On a pay-per-product pricing model, you have to invest a lot of time and money into marketing and sales in order to attract new customers. However, with subscriptions, customers make payments on a recurring basis so you don’t have to invest as much in acquiring new customers to keep your business going.
5. Up-selling and cross-selling are so much easier
When you choose a subscription-based business model, you’re better positioned to make more revenue from existing customers than those that aren’t. This is because you have continuous contact with your customers, building trust and loyalty, making it easier to market additional products to them.
As you can see, launching a subscription business has many advantages. The next step is choosing the right subscription model for your Shopify store.
Most common types of subscription models
The three most common types of subscriptions are curation, replenishment and access. Each subscription model comes with its own distinct set of benefits and drawbacks, so choosing which is the best fit for your business will come down to the type of products you’re selling and your business goals and objectives.
1. Curation business model (subscription boxes)
This is one of the most popular subscription business models, implemented by brands like Birchbox. This subscription model seeks to surprise customers with new, highly personalised items.
More often than not, businesses that adopt the curation model tend to sell fashion apparel, beauty or food, but it can work well across other verticals too.
2. Replenishment business model
This model is all about convenience. Replenishment subscriptions allow customers to automate the purchasing process of essential products, such as diapers, vitamins and pet food. If your product doesn’t need to be replenished regularly, chances are the replenishment model isn’t right for your business.
3. Access business model
The access business model is all about exclusivity. Access subscribers pay a monthly fee to get member-only perks, such as lower-priced products.
Bonus: Add-on subscription business model
Technically, this isn’t a business model, however, it’s an approach some merchants take to add subscription services to their existing business. It’s a flexible way of adopting subscriptions without committing to one revenue model or changing your business entirely. So if you’re unsure about subscriptions, adopt the add-on business model and explore the subscription ecosystem further.
How to set up subscriptions on Shopify
Establish which subscription model is right for you and consider the following:
- Product contents: Will you be replenishing the same product, new products, or giving customers the freedom to select a mix of products?
- Frequency: How often will you be delivering your products on a weekly, bi-weekly, monthly, bi-monthly basis, or will you let customers set their own custom frequency?
- Subscription payment: Will you be charging customers upfront or will you use recurring billing? Also, will you be giving customers a free trial period before committing? And what is the minimum commitment period?
Whether you’re adding recurring payments to your existing business or creating a subscription-based business from scratch, launching subscriptions is simple on Shopify. Generally, there are two approaches to selling subscriptions: integrate a Shopify app or build your own custom solution.
1. Integrate a Shopify subscription app
Shopify’s app store offers lots of different subscription apps to choose from. To save you time, we’ve rounded up a couple, starting with our go-to, ReCharge subscriptions.
- ReCharge: Out-of-the-box, you can manage your bespoke subscription business easily within ReCharge’s powerful merchant portal, whilst enabling your customers to manage their subscriptions directly from your store. On top of that, ReCharge provides you with data-driven customer insights, so you can continually optimise your subscription strategy. Price plans vary from $0 to $300 per month, depending on the number of transactions, level of customisation, and level of analytics required.
- Bold: Built with enterprise businesses in mind, Bold lets you manage and scale your subscription business. Prices start at $49.99 per month and increase depending on the number of advanced features required, including pre-built modules, prioritised support and user permissions.
- PayWhirl: Making it easy to create, manage, and sell subscriptions through Shopify’s native checkout, PayWhirl is reviewed highly on Shopify’s app store. Payment plans vary from $0 to $249 per month on the ‘Ultimate’ package, and transaction fees decrease the higher the plan you’re on.
- Ordergroove: Built only for ecommerce businesses selling on Shopify Plus, Ordergroove helps facilitate recurring relationships with customers. Free to install, pricing varies from business to business.
- Native Subscriptions: A relatively new subscription app, Native is well-reviewed on the Shopify app store. Native offers 0% transaction fees, a 60-day free trial and payment plans start from $9 to $49 per month.
2. Build your own custom subscription solution
We can help you build your own custom subscription solution. Shopify recently introduced Subscription APIs and tooling, enabling developers to build public or private bespoke subscription experiences within the Shopify Checkout.
It’s worth noting that the new Shopify Subscription API, allows apps like Recharge and Bold to connect to Shopify to create and process subscriptions directly through the Shopify checkout. So it’s not a matter of choosing between Shopify’s subscription API or a subscription app, you can have both.
Before the announcement, there were two separate checkouts, the subscription app and Shopify. Customers would go through different checkouts depending on the contents of their cart. Now, merchants can use subscription apps like ReCharge and Bold for customer and subscription management, while order processing will take place through Shopify and its native checkout. One unified checkout for subscription and one-time products.
Your Shopify subscriptions experts
Subscription models are incredibly lucrative – when done right. They not only increase CLV, but they also make shopping with your brand easy and convenient. What’s more, you don’t need a huge budget or advanced technical knowledge to get started.
At Velstar, our ecommerce experts have helped hundreds of brands sell subscriptions on their Shopify stores, and we can do the same for your business. Whether you’re new to recurring payments and require assistance with the implementation, or need support optimising your current subscription program, get in touch with us today!