The Time is Right for Subscription Commerce

Traditionally, when we think about the subscription business model, we think newspapers and magazines. Subscription saves the us the trouble of remembering to get something we need on a periodical basis anyway. It combines utility with convenience. In the past few years, this concept has proliferated to different areas from music to beauty products to fresh produce. Although not a path-breaking concept as such, it is indicative of a unique trend in the way that we live our lives.

Our online and offline existences are no longer mutually exclusive. They are extensions of one another and the lines of demarcation are rather blurry. We don’t give a second thought to the fact that our smartphone reminds us about a meeting and then also maps the driving route based on traffic. This wasn’t a reality of daily life a couple of decades ago. But now, it’s just a fact we take for granted like breathing and walking. That’s the beauty of technology. It integrates itself in a way that renders it invisible. Shopping and products are now being added to the list of things that are just woven into our routines without deliberation.

There are a few different facets to subscription commerce. There’s the subscription services for grocery and other CPG items, and then there’s the more specialized services like Birchbox and Dollar Shave Club. And then there’s a more futuristic outlook that combines subscription with predictive shopping.

The predictive shopping model is especially compelling given the direction in which commerce is moving. In this post about Ambient Shopping Assistants(ASHA), we talked about how Product Intelligence will enable the existence of digital shopping assistants that cater to all our product needs and wants. Predictive algorithms and machine learning will help ASHA to pre-order things that you run out of regularly, say shaving blades or shampoo. There’s a certain cadence that we develop in the usage of these items. Wouldn’t it be great to have a digital shopping assistant that ordered these items at just the right time? No more scrambling around trying to schedule a trip to the store in your already hectic schedule. It’s an annoyance that many would like to do away with. The more these machine learning models learn about a person, the better they’ll get at ordering things.

Amazon already offers a “Subscribe and Save” service for many everyday essentials and personal products. Price is one of the alluring factors here. However in the future, subscription commerce will be tailored more around personalization using the power of Product Intelligence.

There are other non-essential products that also align with the subscription model. Amazon had created buzz around an “anticipatory shipping” patent where books would be packed, ready to go and shipped intuitively based on a reader’s buying and browsing history. Now that would be a pleasant surprise to have the book that you were dying to read waiting on your doorstep on the day that it releases. These services always give you the option to return items, authorize payment, or opt out of the program altogether.

Services like Birchbox  and Julep exemplify a whole other level of subscription commerce for non-essential products. More than a subscription service, this is an “experience service”. With Birchbox, customers get personalized and tailored samples of beauty and grooming products in a keepsake box. The success of the company testifies to the fact that people are ready for, want, and are receptive to these specialized experiences. Even smaller merchants on Etsy are seeing a huge benefit from offering a subscription service to their artisan products.

The potential here is endless. The market is ripe for change and one of the biggest value propositions of this service is “it’s-already-at-my-doorstep”. It’s what we predict to be the form and shape of Commerce 2020. It’s effortless shopping of the future where convenience meets sophisticated personalization, and you experience the simple pleasure derived from the act of opening a box.

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2 thoughts on “The Time is Right for Subscription Commerce”

  1. Great article Anu. I couldn’t agree more.

    The complete commoditization & fragmentation of the ecommerce market is driving merchants to seek new more sustainable business models, and consumers are (thanks to some of the companies you mentioned) finally comfortable with the idea of paying for recurring value in commerce. Thats why I built Cratejoy, the time is definitely right.

    Great writeup!

    1. Anu Hastings says:

      Thank you so much for reading, Amir. It is such an exciting time for innovation in commerce. Great to see companies like Cratejoy leading the way!

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