Amazon led the way in the subscription business model, and others quickly followed, resulting in a remarkable 31% boost in their customer base.
But what’s driving this shift?
People are leaning towards subscriptions for monthly surprises, online services, and product deliveries over one-time splurges, thanks to their affordability and convenience.
The pandemic further accelerated this trend as folks sought safety and comfort in online shopping, from groceries to beauty products and pet supplies.
In fact, over 79% of consumers showed interest in auto-replenishment at that time. And well, the comfort of repeated deliveries and lower prices have continued to dominate the e-commerce sector.
Even when there is continuous growth in the eCommerce subscription business models, many brands across industries are still skeptical. So, if you are wondering whether or not this model is for you, we are here to cover how various industries can benefit from it with examples.
Industries that benefit from subscription models
Businesses across industries continue to experiment and benefit from subscription models. While some prioritize personalization, others focus on pricing to drive more sales. Let’s look at the top industries and examples to understand this better.
1. Fashion and apparel
The fashion and apparel industry has a striking 29% annual retention rate for subscription commerce. This statistic shows that customers strongly favor fashion brands that consistently provide personalized experiences.
These brands generally fall under curation subscription models, delivering custom personalized products based on customer preferences. In fact, a McKinsey survey revealed that curation models are the most popular in eCommerce, with over 55% of total subscriptions.
For example, let’s consider Armoire, a clothing rental company that caters to the preferences of individuals who appreciate designer fashion. It curates personalized boxes of designer items, and their plans span from $79 per month to $139 per month. Here’s how they operate:
Another notable player in the fashion and apparel industry is StitchFix, which stands out for being a stylist we all need from time to time. The brand offers personalized clothing selections based on a fashion quiz and your interactions with their stylists. But here’s the catch— it charges customers solely for the styling fee. No monthly subscriptions, no commitments.
Customers have the freedom to try on the items, keep what they like, and return the rest at no additional cost. If they decide to keep all the items, they receive a 25% discount on the entire purchase. This approach is adopted by other prominent fashion brands as well and is likely to thrive due to the emphasis on personalization.
2. Beauty and cosmetics
The beauty subscription market continues to grow, with global sales of $723.7 million in 2022 and a projected CAGR of 26.7% from 2023 to 2033. In this ever-growing market, curated beauty subscription boxes are expected to be the highest revenue-generating segment, projected to grow at a CAGR of over 28.3%.
Social media influencers are the significant drivers of this industry, as customers focus on and follow their reviews and recommendations. Due to this, most prominent beauty eCommerce subscription companies, such as Ipsy, work with celebrities and influencers to promote their products.
Take their Halsey X Ipsy collab, where they provided $500 worth of beauty products for just $55.
Apart from its limited-edition collabs, Ipsy comes with an affordable subscription plan of $14 per month. And if focusing on price benefits is your goal, then Beauty Pie is another excellent example of the best eCommerce subscription business models.
It allows you to either become a member and enjoy super affordable prices of its luxury high-end products or pay the average hefty retail rates.
If becoming a member will let you pay £34 instead of £110, then who wouldn’t take it, right?
So, in case you plan on following this model, keep these things in mind:
- Give a free 30-day access to help evaluate the benefits of paying the membership fee.
- Keep the membership fee affordable ($10/$20/$30 a month) as customers still have to pay for the products, even if they have discounted rates.
- Show your audience what they are missing out on by not becoming a member, just like Beauty Pie does.
3. Health and wellness
People these days prioritize their health above everything else. A survey conducted by McKinsey across six countries with 7500 participants showed that 42% of them consider wellness their top priority. This heightened focus on wellness has propelled the global wellness market to an impressive $1.5 trillion, with annual growth of 5% to 10%.
Despite this significant growth, the market is becoming increasingly crowded. As a result, health and wellness companies need to create plans and packages that offer maximum benefits to stand out.
Take Fitbit, for example, one of the best eCommerce subscription apps that covers everything from workout videos, heart rate monitoring, and stress management to meal and water-logging, menstrual health tracking, and recipe hacks.
The platform lets customers access the premium plan free for up to 90 days to show how it can help develop a fitness plan customers have always wanted.
Myfitnesspal is another excellent example of an eCommerce subscription business model in the health industry. It provides custom nutrition tracking to help achieve fitness goals. The premium plan costs $79.99 annually and covers everything customers need to maintain a nutritious diet.
4. Food and Beverage
Subscriptions in the food and beverage industry are on the rise, providing easy access to your favorite culinary delights or giving them as gifts to loved ones. These subscriptions go beyond simply delivering food items; they are all about delivering a memorable experience.
For instance, consider Martha Stewart’s Marley Spoon. You can select from a range of Martha’s timeless recipes every week. The service will then send you pre-portioned ingredients, making it effortless for you to prepare these delectable dishes.
Next, if we talk about the beverage industry, Flaviar Whiskey is an excellent example. It caters to the needs of whiskey enthusiasts and provides custom packages with curated tasting boxes and access to exclusive spirits for its members.
The subscription ranges between $60 to $290, depending on whether you subscribe monthly, half-yearly, or yearly.
5. Media and entertainment
Have you ever received a movie recommendation and immediately wondered if it’s on Netflix? Or perhaps you’ve frequently searched for your favorite songs on Apple Music. If so, you’re not alone. This reflects the growing trend of people opting for media and entertainment subscriptions.
To put it in perspective, in 2021, the global video streaming industry was worth $60.1 billion, and it’s projected to surge to an impressive $330 billion by 2030.
Next, when it comes to the music industry, music streaming makes up 84% of the U.S. music industry revenue, and 78% of this revenue comes from paid subscriptions. While this number was $4.6 billion in the first half of 2021, it has increased by 25% year-by-year. So, platforms like Spotify, Apple Music, and Amazon Music continue to gain popularity among the audience.
Spotify, for example, operates on a freemium revenue model. Users can access ad-supported music for free or subscribe to a premium plan at a fixed cost. The platform has been consistently successful, with over 220 million subscribers in 2023, marking a 17% increase compared to the previous year.
6. Online learning
Online learning encompasses various sectors, including corporate training, higher education, professional development, and language learning. The corporate training sector, in particular, is significant, with organizations and individuals collectively investing over $200 billion annually to enhance job performance.
LinkedIn Learning effectively caters to this market by offering a range of options to its customers. You can choose to pay for individual courses or subscribe monthly or yearly. This flexibility is beneficial for individual learners and organizations seeking to upskill their employees, as they can provide these subscriptions as valuable gifts.
Tips to make eCommerce subscription models a success
Now that you know how some of the best eCommerce business models operate, here are some tips to succeed in yours:
- Survey your existing customers to understand their preferences in a subscription model. Understand what they would like in plans and packages. Keep modifying your premium plans accordingly and gather feedback.
- Keep the pricing low initially to make customers subscribe to your premium plans. Remember that customers are drawn towards reasonable pricing and abundant benefits.
- Provide 30, 60, or 90-day free access to help them understand the benefit of subscribing. If they know they are getting value for money, you will find them recommending your plans to their friends and family.
- Prioritize personalization to ensure you cater to the super-specific needs of your customers. Watch how your curated boxes turn into best selling items when you focus on what customers need.
Now that we see rapid growth in eCommerce subscription business models, it’s time to make the most of it. If you are a Shopify merchant, Appstle can help you enhance your overall eCommerce operations, particularly in subscriptions, recurring orders, loyalty programs, and memberships.
It has tools and features that automate various aspects of subscription management, such as processing recurring payments, tracking subscription renewals, and managing customer accounts. It also allows businesses to tailor their subscription offerings to suit their needs. This could include setting different subscription durations, pricing tiers, and product options.
Most importantly, it smoothly integrates with Shopify or Shopify Plus and saves you from the hassle of managing separate systems.
So, if you want to explore the potential of your eCommerce subscription business models fully, reach out to us today!