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The power of the subscription model in eCommerce

In recent years, we’ve witnessed a significant shift in consumer expectations when it comes to shopping. No longer satisfied with merely purchasing products, today’s consumers seek personalized experiences, convenience, and cost-effectiveness. This changing landscape has propelled the subscription model to the forefront of modern retailing, offering businesses a pathway to meet evolving consumer needs and foster long-term customer loyalty.

In this blog post, we walk you through the ups and downs of offering subscriptions and give you an insight into a success story of our own – Estrid.

Understanding the subscription model

The subscription eCommerce market is experiencing unprecedented growth, driven by several key factors. One such factor is revenue stability, as subscription models provide businesses with recurring revenue streams, reducing uncertainty and increasing predictability. Additionally, subscriptions offer valuable data insights into customer behavior and preferences, enabling businesses to tailor their offerings and enhance the overall customer experience.

Moreover, subscriptions provide customers with convenience and savings through personalized deals and lower price points. By offering subscription options, businesses can streamline the purchasing process and provide customers with hassle-free access to their favorite products or services.

How to launch your subscription business in 5 steps

Define your niche

To kickstart a successful online subscription business, start by honing in on your niche. Identify your target audience—the individuals who have a problem you can solve. Conduct interviews to uncover their pain points and areas where they would be willing to pay for assistance. Once you have this clarity, craft a compelling Big Purpose Statement to guide your business’s direction.

Select your tech stack

Once you understand your ideal member and their needs, choose a monetization model that aligns with your offerings. Depending on your business model, you may opt for a platform, a software solution, or a subscription-based platform like Chargebee or Subbly. Consider platforms that offer flexibility and features to support your content, community, courses, and commerce needs.

Identify your customers

Determine how you’ll attract customers to your subscription business. Reach out to the individuals you interviewed during your niche research phase and inform them about your upcoming venture. Utilize various tools and strategies such as social media, email marketing, webinars, and free trials to expand your customer base.

Provide value

Once you have paying customers, focus on delivering value to keep them engaged. Leverage the insights from your niche research to offer tailored solutions to your members’ needs. Avoid overwhelming your customers with excessive content and instead focus on delivering meaningful transformations that align with their goals.

Evaluate and adjust

Regularly assess the performance of your subscription business and be prepared to adapt as needed. Stay lean and agile, making changes that enhance your ability to serve your audience effectively. By continually refining your approach, you can ensure long-term success and customer satisfaction.

Challenges of implementing a subscription model

While the benefits of the subscription model are clear, implementing it successfully can pose several challenges for businesses. From overhauling existing systems and processes to redesigning the customer experience, transitioning to a subscription-based model requires careful planning and execution.

One of the key challenges businesses face is transforming their entire operations to accommodate the subscription model. This includes adjusting financial forecasting, reporting, and investment cycles to align with the recurring revenue model. Additionally, delivering a positive subscription experience requires businesses to redesign their customer journey and offer personalized content that evolves.

How Prime Penguin supports Estrid in their growth journey

As businesses navigate the complexities of implementing a subscription model, Prime Penguin offers a comprehensive integration platform designed to streamline the process. Our platform seamlessly connects with existing systems and processes, allowing businesses to transition to a subscription-based model with ease.

For example, as a rapidly growing brand, Estrid understood early on that a scalable logistics management solution would be necessary for their expansion plans. Along the way, the company faced issues with its subscription platform Chargebee lacking SKU and barcode support, which made communication with the third-party logistics partner Mainfreight very difficult.

Prime Penguin helped Estrid resolve its SKU and barcode difficulties by adding custom fields for these properties in Chargebee. As a result, the Prime Penguin module was able to match product IDs with the correct SKUs in Mainfreight’s inventory, enabling the 3PL provider to keep correct track of inventory for picking and packing. Estrid’s Chargebee subscription platform now communicates seamlessly with Mainfreight’s warehouses in both the UK and mainland EU via Prime Penguin, with minimal overhead.

This has significantly improved operational efficiency, while eliminating the need for developing and maintaining a proprietary solution. And perhaps as importantly, it has also effectively removed Estrid’s dependency on any individual platform as the brand continues to grow across Europe and beyond.

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Max Ericsson

Technical Account Manager