Many business owners and entrepreneurs are moving towards the subscription model type of business. According to Statista, the most popular subscription box business had 3.3 million visits as at September 2017.
The popularity of subscription boxes has continued to increase over the years with customers seeking convenient ways to shop. And business owners are investing in it because it is a profitable venture.
Below are some of the reasons why you should venture into the subscription model business.
The Subscription Model Allows You To Predict Your Future Cash Flow
Once you have a subscribers list, you can easily predict how much you will earn in the next month or year. Since your customers have already committed to a monthly subscription, it is easier to predict your cash flow as opposed to when your business is dealing with one time customers only.
However, note that there will always be the possibility of some of your customers unsubscribing if their circumstances change. When this happens, your predicted cash flow will be higher than your actual income.
This can easily happen if you don’t work on gaining more customers. Thus, the best approach is to offer high quality products to keep the customers from leaving and work on gaining new ones continually to fill the gaps of those who may opt out.
This way the real income will always be higher than your predicted cash flow.
Shipping for subscription based ecommerce is easy for two reasons. One, you use the same packing materials for all your orders and thus sourcing the packing materials and preparing the package for shipping is simple.
Two, all the packages ship on the same day and this not only saves time but costs too. You can negotiate for better shipping terms when sending numerous packages all at once.
Low Cost For Customer Retention
When a customer subscribes to receive your products for an entire year, they will receive your products each month even when you don’t market to them. Their next month’s purchase will automatically be processed with minimal engagement on social media and other marketing channels.
However, even if your customers’ orders renew automatically, it is still important to engage them and keep reminding them of your brand and why they chose you in the first place. This is because subscription box ecommerce is gaining wide popularity and therefore your customers may move to another retailer who engages with them more often.
It’s Easier To Get Feedback And Reviews
When customers buys from you repeatedly, it will be easier to get feedback from them. They will be keen to report any issues, concerns and areas for improvement to help you deliver better products the next month.
With a onetime purchase, a customer can easily ignore issues. This is because they know they won’t be getting the product again. But with a subscription, customers are less likely to stay silent. When you get negative feedback, ensure that you work on it to keep your customers from leaving.
Subscription box ecommerce has so many benefits to both the retailers and the customers. For the customer it’s mostly about the convenience and a surprise unboxing experience.
For the retailers, on the other hand, the benefits are consistent sales throughout the year at a lower cost and less work.