The New Era of Online Shopping

Chances are you’ve at least heard of one the biggest trends in the eCommerce world: subscriptions. Whether customers are signing up for practical reasons or as a fun gift idea, there are countless iterations for this kind of online store. The rapid expansion of eCommerce subscriptions is ushering in a new era of online shopping.​

Benefits to Consumers

A service is only going to be successful in the long run if it provides a benefit to the people who use it. Fortunately, there are several distinct reasons why consumers typically get a good deal by signing up for subscription eCommerce.

• Provides ease of service for consumers: If you have the option of going out to the store to get something versus having it brought to you on a schedule—most people will probably take the latter option. The convenience of having essentials delivered on a recurring basis is massively helpful to consumers. Dollar Shave Club is a great example of this since many people need to use razors at a set rate.

• Subscriptions often make eCommerce more affordable: The luxury of having things delivered typically makes them more expensive. However, this isn’t always the case with subscription eCommerce models, which can often offer customers discounts since it’s easier for businesses to increase margins.

• Getting subscriptions is fun and trendy: There’s something novel and exciting about receiving a subscription service. It’s part anticipation, part being intrigued about what you’re going to get this time.

Drawbacks to Consumers

Of course, not all aspects of the subscription eCommerce model are perfect. These are a few ways that it can potentially cause issues for consumers.

• Sometimes buyers get things they don’t need: There’s always a danger of ending up with goods that aren’t really necessary to your life. But this can be a particularly prevalent phenomenon when coupled with subscription eCommerce. Some services don’t tell you what you’re getting ahead of time. If buyers don’t like it, they might have just spent money on something that’s a waste. But how long do you think e-stores can sustain what customers see as wasteful spending?

• It can be costly for customers to get too many subscriptions they don’t need: As already mentioned, subscription eCommerce can be super useful when it’s for things that shoppers already need to buy. But on the other hand, people can let themselves sign up for too many subscriptions that don’t actually make sense. This is just a trait of subscriptions in general—not just when it’s related to eCommerce. Thus, you should expect some drop off if you move to a subscription model.

Benefits to Vendors

Subscription services are totally changing the definition of eCommerce for vendors. These are a few of the reasons why this business model is providing huge upside for a lot of entrepreneurs.

• Consistent cash flow: Making money is a big challenge in running any kind of business. With a lot of organizations, you can be making a lot one week, they have no income the next. Subscription eCommerce companies don’t have to worry about this as much, as they receive consistent payments for services.
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• Can predict future revenue: Due to the consistency of cash flow, it’s also easier for subscription eCommerce companies to get a feel for their future revenues. This affords organizations using this model to use funds in more intelligent ways.

• There are many opportunities for success in subscription eCommerce: This is a rapidly growing model for doing online business. In fact, it has seen about 900 percent growth since 2014. Let that statistic sink in for a minute. There’s a ton of room for new players to break into this space and get a slice of some of that action.

• Lower eCommerce return rates: Returns are one of the main issues prevalent in typical eCommerce organizations. The average eCommerce outfit suffers from return rates in the ballpark of 30 percent. Issues such as poor photos, and people ordering things just to try them out, contribute to this. Subscription eCommerce companies don’t have to worry about this issue.

Drawbacks to Vendors

It should be noted that subscription eCommerce models also have downsides on the business’s end. These are a few things to consider before starting a subscription eCommerce company.

• The pressure to curate customer experiences: Some people will have high expectations for their subscription services. Personalized experiences are more popular among shoppers than ever before. This can make it harder for companies to meet the demand of consumers, especially as their organizations grow to a larger scale.

• Possible difficulties with inventory: The obvious benefit to rapid growth is that you can quickly scale your business and make more money. The downside is that growing too fast can lead to issues with inventory and keeping up with deliveries.   

Subscription eCommerce is a fun, exciting new way for companies and shoppers to do business. There are tons of opportunities for individuals to break into this world right now since it’s still in its early stages.