A traditional ecommerce business involves an online catalog where the customers can browse through the products, add to cart and check out. A variation of traditional ecommerce is Subscription based model which works differently. It is a more innovative and unique kind of business model that focuses on involving the customers at a different level. Instead of allowing the customers just to simply buy out products it sells subscriptions to receive products on a regular basis. The seller creates a package of products that the customer will receive every month (or whatever duration the seller wants to keep), puts a price for each delivery and an automatic recurring billing/payment system automatically charges the customer unless the customer manually cancels the subscription or the subscription ends. This is a good business model if the business sells items that are not purchased on off or requires the customers to browse through and choose. For example toothbrushes, shaving razors, cosmetics such daily use lotions etc., An experienced ecommerce website development company would be able to guide you for how a subscription based model can work for your business.
This model benefits the customers in the following ways:
1) No need to place manual orders each time: Removes the hassle of manually ordering the same products regularly. The items that a customer uses on a regular basis do not need to be purchased again and again. Order once and you get it on a regular basis.
2) Get Discounts: Most of subscription based sites give discounts to customers when they engage with them for a longer period of time. This discount the customers would otherwise may not get if they bought the product as one off from an ecommerce website.
3) Flexibility to discontinue: If after a few months the customers change their mind, they get the flexibility to cancel the subscription model that prevents them from getting charged for the subsequent time charges.
This model benefits the ecommerce store owners in the following ways:
1) Get repeat customers and orders: Getting customers on a website is a painstaking and expensive process that involves focused advertising. Then having the users convert to customers is another challenge. It takes analysis and adjustments in the marketing campaign and landing pages to reduce the cart abondenment. But once you get these customers and they just buy one off vis they sign up for an year to get products from you every month is a better scenario. With subscription model you make customers for life provided you live up to their expectations otherwise they would cancel the subscription soon.
2) Focused group to promote up and cross sales: Once you get regular customers who stay with you for long term then you can promote related products to them to have them buy more from you. For example an ecommerce store providing subscription of shaving razers sends out emailers to customers promoting moisturizers or after shave balms. It is generally seen that it is easier to upsell and cross sell to customers who are engaged with your brand for a longer term.