Subscription Based eCommerce

Subscription eCommerce is a fast-growing segment that offers shoppers a convenient, often low-cost way to access consumer products or services. Types of subscription services can be segmented into 3 groups, curation, replenishment, and access. Curation, the largest segment surprises and delights consumers by introducing them to products they previously would not have access to. Replenishment helps consumers conveniently gain a steady supply of commodity items (razors). Finally, access refers to giving consumers access to lower prices and perks.

The subscription trend growth has spread widely across industries, including beauty and personal care, food and beverage, clothing and fashion, entertainment, and health and fitness. Beauty and personal care are by far the largest segment. McKinsey estimates that 75% of organizations that are B2C will have a subscription offering by 2023. Additionally, OTT video streaming, digital news and media, and e-learning companies have begun emerging as strong players and have had high growth. Travel and hospitality and sports-related companies have contracted slightly and will grow at a slower rate. 

Though highly efficient, key challenges for subscription products include wrapping and packaging of the goods. These often incur the greatest costs. In addition, logistics and timing of delivery is especially important, especially with certain consumer goods. Finally, stickiness is a risk and churn can be high when consumers realize that they no longer need the product. Subscription companies often utilize rewards and loyalty to keep people around.