Why choose an eCommerce subscription model? #
According to Fortune Business Insights, the European eCommerce subscription market is projected to make over 671 billion US-Dollars in 2026. Currently, that represents a global market share of 21,6%. Many experts project a huge growth rate for European eCommerce businesses in 2026 due to increased demands for subscription boxes, streaming, meal deliveries and more.
As of today, there is hardly any eCommerce and/or consumer good that can’t be purchased regularly via a subscription. From dog food to dating platforms – the market is booming.
There are different reasons why eCommerce subscription models are so popular, not just for costumers but also for merchants:
- Subscriptions provide more reliable revenue data and increase customer loyalty
- Subscriptions give you more insights into customer preferences and behavior which helps you increase retention and plan your portfolio
- eCommerce subscription models can be very diverse, offering you new revenue streams and potentially completely new target groups and markets (e.g., not everything needs to be a subscription box, there are service subscriptions, paid club memberships and many more).
You have probably already heard about the general saying that acquiring new customers is a lot more expensive than retaining customers. In fact, loyal customers are usually the most engaged, they spend more, are more likely to stick with your business through volatile times (e.g. Covid) and they are amazing brand ambassadors.
Research done by Bain & Company shows that retaining just 5% of your customers can boost your profits by 25% to 95%.
Switching to the eCommerce subscription model #
Some businesses might be hesitant to try out subscriptions because they are scared of the technical setup. Yes, recurring invoicing requires a more complex setup than one-time purchases but having a payments and invoicing setup that motivates customers to sign up for a membership or subscription account has a lot of advantages.
There are subscription management solutions on the market that are specialized to support eCommerce subscription models with the right payment services, subscription management and recurring invoicing.
Customer success story: Matas loyalty club
The Danish beauty, personal care and health products retailer Matas offers their customers a paid club membership that provides them with a substantial discount of 20%, free delivery and refill options.
Frisbii has been supporting Matas since 2019 with payment services and subscription management. Read more in our Matas success story.
1. Test out product subscriptions
Dig into your data and identify products that are not just popular but attract return purchases. These items are perfect to offer them both as one-time and subscription purchases (which may or may not have a small discount compared to one-time purchases). Your customers will appreciate that they no longer have to remember to buy a new product and it will be a lot less likely that they switch to a competitor.
Or get creative and identify which services or customer perks provide enough value to be a subscription. You can get inspired with our many examples in our subscription business models blog article.
2. Provide flexible subscription plans
Customers love flexibility and control over their subscriptions. Offering them different payment frequencies (monthly, for 3 months, annual) can increase conversions and make sure that your customers don’t feel tied down. For product subscriptions, the volume can equally be something flexible with discounts for higher numbers (e.g. 10% discount if you purchase three items per month).
Make sure to enable easy up- and downgrades. Never be scared of making it easy to downgrade because the alternative is a full cancellation which increases your customer churn rate (and decreases your predicted revenue). Meet the customer where they are instead of forcing them into one single, rigid subscription.
3. Set up your eCommerce subscription model
You will require a reliable, flexible and scalable payments and billing software to manage your subscriptions. Ideally, it includes payment services and is able to easily connect to your CMS or web shop.
In eCommerce, a payment gateway is the online payment portal that’s used on websites to take payments from customers. There are many payment gateway options available, so it’s important to pick the right one.
A good payment gateway will accept most popular payment methods to make sign-ups frictionless. It is quite possible that your current payments mix and agreements are only for one-time payments. That’s why it is important to choose a payment gateway that offers recurring payment options.
Security is another aspect that should not be missed. You want a solution that’s compliant with your local and – depending on your market strategy – international payment standards, security certificates and invoicing requirements.
Subscription management includes topics such as recurring billing, the setup of your pricing and subscription plans (including discounts, add-ons, vouchers) and customer self-service, so your customers can manage their payment methods and access their invoices and subscription info.
Ideally, you have a subscription platform that allows you to experiment and be flexible with your eCommerce subscription models. Payment reminders, a proper dunning integration and fraud protection are equally important to ensure your cashflow and protect your revenue.
What subscription features do you need for your eCommerce subscriptions? #
For most eCommerce subscription models, there are a few vital features you should look out for, including:
- Upgrades and downgrades,
- Price adjustments,
- Coupons and discounts,
- Add-ons,
- Subscription pauses
- Automated payment reminders
- Let’s take a closer look at some of these features.
- Upgrades and downgrades
If you’re offering a subscription service, it’s important to give your customers the ability to easily manage their orders. Choosing a subscription management platform that will automatically handle upgrades and downgrades will save you a lot of time, effort, and potentially money.
Price adjustments
Not every customer is the same, and you should be able to adjust prices accordingly. Depending on what kind of product or service you’re offering, you may want to offer different plans for different customer personas to increase your overall market share.
Coupons and discounts
Coupons and discounts can be a powerful tool when it comes to offering the best service possible. You will want an eCommerce subscription platform that makes it easy to offer personalized coupons and discounts for loyal customers, new acquisitions or customers who are at risk of churning.
Add-ons
Add-ons are one-time services that customers can purchase (e.g. the delivery and installation of furniture, or the fixing of an electronic device). If you have services or products that are ideal add-ons to your subscriptions, you’d want a subscription platform that makes it easy to add them and bill them without complications.
Subscription pauses (and cancellations)
Customers want flexibility. They want it so much, that they will look at the cancellation process before they subscribe to your subscription plan. If you make it easy for customers to pause or cancel a subscription, you automatically show them that they can trust you and that they control their subscription. You want to look for a subscription platform that makes it easy for your customers to pause and cancel and for your billing processes to process pausations and cancellations.
Automated payment reminders
Late payments are a necessary evil not just for eCommerce businesses. But instead of escalating the situation immediately, we advise to send three or even four timed and friendly payment reminders. That way, you can increase the probability of getting your money and keeping a healthy customer relationship. If you find a subscription platform that allows you to manage payment reminders, you can save your customer support and finance team a lot of headaches.
Frisbii provides you with an all-in-one payments and subscription management solution to experiment with subscription plans, enable a frictionless checkout experience and automate your recurring invoices in the background. Start your eCommerce subscription model for predictable revenue and loyal customer relationships.
Interested? Book a demo or try it out for free.
