I-Fulfilment
01425 200 222
Contact us

Sample and Subscriptions

The Rise of Subscription Models in the Digital Age

The Rise of Subscription Models in the Digital Age​

Subscriptions to eCommerce sites are here to stay. They are no longer a nice-to-have business strategy but rather a requirement for long-term growth. According to UnivDatos research, the global eCommerce subscription industry is predicted to reach £2.17 trillion ($2.64 trillion) by 2028. 

eCommerce subscription is indeed a powerful model that offers numerous benefits for both consumers and merchants. It provides consumers with flexibility while giving merchants the sustainability they need for their businesses. Additionally, it improves the whole customer experience, and when implemented well, operational efficiency can be unlocked. 

In this piece, we will explore the following;

Download our FREE Guide
What is the eCommerce Subscription Model

What is the eCommerce Subscription Model?

An eCommerce subscription is a business model where customers pay for regular deliveries of products or services. This service usually comes regularly in the form of a subscription box. Many eCommerce companies that deliver products offer small discounts on retail prices, which allows customers to save money while providing companies with long-term revenue streams. 

In 2011, Birchbox became a cosmetics monthly sample box service and quickly became popular. It grew to over 45,000 members in less than a year and was once valued at half a billion dollars. Birchbox was the first successful example of a subscription box in eCommerce industry. 

Today, Amazon, the leading online shopping platform, is adopting a subscription-based approach to provide customers with a “Subscribe and Save” option. This feature allows customers to receive regular deliveries of household essentials, personal care items, and health-related products directly to their homes every month. Customers who subscribe to five or more products monthly are eligible for a 15% discount on those items. 

Types of Subscriptions for eCommerce Businesses

If you’re considering launching a subscription product for your thriving eCommerce business, it’s essential to understand the different types of subscription models you could offer. Here are three main types:

Replenishment Subscriptions

A replenishment subscription business model makes it simple for clients to purchase consumable products they use regularly. These products are then delivered to them on autopilot at predetermined times, usually at a discounted rate.  

Examples include supplements, wellness products and more. Customers appreciate the convenience of automatic deliveries and not having to remember to place orders.

Curation Subscriptions

Curation subscription models are subscription boxes that typically include a collection of products like apparel or can be samples of organic products. This form of subscription provides a selection of products tailored to each customer’s specific needs and preferences. 

Customers enjoy the surprise and discovery aspect of this model. However, it is associated with both high quality and high cost because of the level of personalisation it offers.

Access Subscriptions

An access subscriptions model offers subscribers exclusive access to products or services. These could be access to premium products that are difficult to find or bulk items with a significant discount.  

This model can help build customer loyalty and increase lifetime value, as subscribers feel they are getting additional discounts from the exclusive access. Remember, it’s not just about making a sale but about nurturing an ongoing relationship with your customers.

Factors Driving Adoption of eCommerce Subscriptions 

The adoption of eCommerce subscriptions in the UK is being driven by several key factors, making it a popular choice among consumers.

Convenience

The ability to have everyday items delivered regularly to their doorstep eliminates the need for frequent trips to the store. This is particularly beneficial for busy individuals or those who may have difficulty leaving their homes. This convenience factor is particularly appealing in a fast-paced world, saving customers time and effort.

Price

The cost-effectiveness of eCommerce subscriptions is another compelling factor. Many subscription services offer discounted prices compared to buying individual items separately. This cost-saving aspect encourages customers to opt for subscriptions as they can get the products they need at a lower overall cost.

Personalisation

eCommerce subscriptions are not just about convenience and cost savings; they also bring an element of personalisation to the shopping experience. Numerous brands empower customers to curate their own subscription boxes with specific products. This level of customisation allows consumers to tailor their purchases according to their individual preferences, creating a more personalised and enjoyable shopping experience.

Sustainability

For environmentally conscious consumers, eCommerce subscriptions can also be seen as a more sustainable choice. Subscription services often focus on reducing packaging waste and promoting eco-friendly practices, which resonates with individuals looking to make environmentally responsible choices.

Benefits of Subscription Models for eCommerce 

The subscription business model offers numerous advantages for eCommerce businesses. Here are some key benefits: 

Group 1 24 |

Predictable Revenue

Subscriptions provide a steady stream of income, making it easier for businesses to forecast and plan their finances. This predictability can be particularly valuable for budgeting and investment decisions.

Group 1 4 |

Customer Retention

Subscribers are more likely to remain loyal to a brand or service, reducing churn compared to one-time purchases. Continuous engagement and value delivery help maintain customer relationships over the long term.

Group 1 6 |

Improved Customer Relationships

Subscription models often involve ongoing interactions with customers, such as sending updates, new content, or product improvements. This engagement can strengthen the relationship between the business and its customers.

Optimised Shipping

Upsell and Cross-Sell Opportunities

Once customers are subscribed, businesses can upsell or cross-sell additional products, services, or features to increase revenue per customer.

Group 1 18 |

Lower Customer Acquisition Costs

Subscription models can help you build long-term relationships, which means you don’t have to rely as much on acquiring new customers, and it generates more opportunities for referrals, which can be more cost-effective in the long run.

Experience Seamless Subscription Service with I-Fulfilment

Challenges of Fulfilling Subscription Orders

While subscriptions make things easier for customers, recurring shipments create their own set of challenges for ecommerce businesses. Here are some of the most challenging aspects of subscription box fulfillment.  

Challenges of Fulfilling Subscription Orders ​

Shipping orders on time

Meeting customer expectations for timely and predictable deliveries is paramount in the world of subscription services. Especially when customers rely on your products as daily necessities, they anticipate receiving their shipments at the same time every month or on their chosen recurring schedule. Ensuring that your subscription orders are consistently shipped on time is fundamental to providing an exceptional subscription experience for your customers.

Changing products monthly

If you regularly update the contents of your monthly subscription box, it's essential to plan ahead and provide your manufacturer or supplier with sufficient lead time to deliver the products to you or your e-commerce fulfillment partner. Even if your subscriptions remain consistent from month to month, effective inventory management is vital to monitor your product availability and prevent instances of running out of stock.

Maintaining quality control

Crafting intricately curated subscription boxes can be a challenging task, whether you handle order fulfillment internally or rely on a third-party fulfillment provider. Unlike standard shipments, which may consist of a simple box, some packaging material, and a few products, meticulously curated subscription boxes demand unique and meticulous care and attention to detail.

Cost constraints

Managing the costs associated with subscription box fulfillment can be a significant challenge for e-commerce businesses. Subscription and sampling e-commerce orders often involve low-value items, and the expenses related to packaging, postage, and overall fulfillment can be substantial.

These cost constraints can impact profit margins and require careful optimisation of fulfillment processes and shipping strategies to ensure the financial viability of subscription services. Balancing cost efficiency and providing a high-quality subscription experience is essential for long-term success in this sector.

What to Look for in a 3PL for Subscription Fulfillment

Selecting the right fulfillment company is crucial, as they can transform what might otherwise be a complex and time-consuming process into a smooth and effortless experience for both you and your valued customers. 

Here are the most important factors to consider when selecting a fulfillment provider for subscription box businesses. 

Custom Branded Packaging 

The customer experience extends beyond the checkout process. The moment your customers receive their subscription box is their first tangible interaction with your products. Before they even dive into the contents, they encounter the packaging itself, whether it’s a plain brown box, one with a shipping carrier’s logo, or a completely customised design. This initial impression plays a pivotal role in shaping whether customers eagerly anticipate unboxing their subscription box each time they receive a new shipment. 

According to a study conducted by Dotcom Distribution, 34% of individuals stated that the use of branded packaging significantly influences their perception of the brand or retailer responsible for shipping the item. Moreover, custom packaging can wield substantial influence over word-of-mouth marketing for your brand, with the same study revealing that 40% of online shoppers are more inclined to recommend products to friends if they come in branded packaging. 

Therefore, it’s imperative to collaborate with a fulfillment provider who not only accommodates custom packaging but also respects specific packing instructions, such as incorporating tissue paper or including a printed insert inside the box. This ensures that your subscription box not only contains remarkable products but also delivers an unforgettable unboxing experience that leaves a lasting impression on your customers. 

Flexibility of Fulfillment Centers 

Subscription box businesses often experience fluctuations in inventory and order volume throughout the month. For instance, if you send out monthly curated subscription boxes, your warehousing needs can vary significantly throughout the month. At the beginning of the month, you may require minimal warehouse space, but as you approach the shipment date, your space requirements may increase substantially.  

Working with a 3PL allows you to easily adjust the amount of warehouse space you use based on your changing needs. This flexibility allows you to scale up or down in terms of storage space as needed, ensuring that you only pay for the space you use. Not only does this enhance your operational efficiency, but it also helps reduce storage costs, as you’re not locked into a fixed space requirement throughout the year. 

Automated Fulfillment 

Automated fulfillment is more than just operational efficiency; it’s a strategic advantage for subscription businesses. Your fulfillment provider should leverage cutting-edge technology to streamline the entire order fulfillment process, from order intake to shipping, ensuring that every step is executed with precision and speed. 

Moreover, technology-driven fulfillment providers can integrate into multiple eCommerce and marketplace platforms to check your order history, inventory levels, and customer preferences and gain valuable insights. This data-driven approach will help you make informed decisions, optimise inventory management, and enhance the overall customer experience. 

Efficient Inventory Management 

Effective inventory management is important for the smooth operation of your business. While you do have the option of using third-party inventory management tools, we highly recommend considering a 3PL (third-party logistics) provider that offers integrated inventory management technology. 

 

By selecting a 3PL with built-in inventory management capabilities, you consolidate your order fulfillment reporting and inventory forecasting data into a single, unified system. This integration is a powerful way to streamline your supply chain and enhance your overall efficiency. 

Custom-tailored Pricing 

Ultimately, the advantages of outsourcing fulfillment for your subscription box business may lose their significance if the associated costs erode your profit margins. It’s crucial to recognise that various fulfillment companies employ distinct pricing models. 

Furthermore, it’s important to verify that the 3PL you select has the flexibility to handle unique projects and requirements. At I-Fulfilment, we understand that businesses may have specific packaging or shipping needs. That’s why our team is prepared to provide you with a tailored quote that aligns precisely with the unique requirements of your business. 

Integrate Your Subscription Fulfillment Service

Key Advantages of Choosing I-Fulfilment for eCommerce Subscriptions 

At I-Fulfillment, we thrive on turning fulfillment challenges into solutions. Whether you need subscription services, high-value fulfillment, or oversized shipping, we’re ready to support your growth. Our secret to success lies in our ability to craft tailor-made solutions, driven by our state-of-the-art BladePRO technology, that cater specifically to your unique needs. 

High Volume Support

When it comes to eCommerce subscriptions, handling high volumes of orders and customers is crucial for success. I-Fulfilment offers several advantages in this regard:

  • Scalability: I-Fulfilment is designed to accommodate the growth of your eCommerce subscription business. As your customer base and order volume increase, they can scale their operations accordingly. This scalability ensures that your business can handle sudden surges in demand during promotions or holiday seasons.
  • Efficient Order Processing: I-Fulfilment likely employs advanced automation and order management systems, which not only streamline the order fulfillment process but also reduce the chances of errors. This ensures that your customers receive their subscriptions accurately and on time.
  • Reduced Fulfillment Times: High volume support often means faster turnaround times. I-Fulfilment's efficient processes can help minimise the time it takes to pick, pack, and ship your subscription products, leading to improved customer satisfaction.

Cost Efficiency

Efficiency in eCommerce subscription fulfillment is directly linked to cost savings. Here's how I-Fulfilment can help you achieve cost efficiency:

  • Economies of Scale: With a high volume of orders, I-Fulfilment can negotiate better rates with shipping carriers, reducing your shipping costs. They can also optimise their warehouse operations for cost savings, ultimately benefiting your bottom line.
  • Reduced Labor Costs: Automation and efficient processes can help I-Fulfilment reduce the need for excessive manual labour, leading to lower labour costs. This, in turn, can translate into cost savings for your eCommerce subscription business.
  • Inventory Management: I-Fulfilment can help you optimise your inventory management, preventing overstock or understock situations. This minimises storage costs and the risk of unsold inventory.

Quality Assurance

Ensuring the quality of your eCommerce subscription products and services is essential for customer satisfaction and brand reputation. I-Fulfilment contributes to quality assurance in several ways:

  • Accuracy: I-Fulfilment employs technologies like barcode scanning and automated order verification to minimise errors in order fulfillment. This ensures that customers receive the correct products, reducing the likelihood of returns or complaints.
  • Packaging: Proper packaging is crucial to protect your products during shipping. I-Fulfilment typically uses quality packaging materials and methods to safeguard your items and maintain their quality until they reach the customer.
  • Returns Management: In the event of returns or exchanges, I-Fulfilment can handle the process efficiently, ensuring that returned items are inspected, restocked, or refurbished as necessary.

Predictable Output

Predictability in eCommerce subscription fulfillment is vital for planning and maintaining customer satisfaction. I-Fulfilment offers predictability through:

  • Service Level Agreements (SLAs): I-Fulfilment often operates under SLAs, which define the expected turnaround times, accuracy levels, and service quality. These SLAs provide you with clear expectations and predictability in terms of service.
  • Inventory Visibility: I-Fulfilment systems provide real-time visibility into your inventory levels, helping you plan for restocks or new product launches. This prevents stockouts and ensures that subscriptions are fulfilled as scheduled.
  • Performance Metrics: I-Fulfilment typically provides detailed performance reports, allowing you to track key metrics like order accuracy, fulfillment times, and shipping costs. This data enables you to make informed decisions and continuously improve your subscription services.

Download Your FREE Guide: 'How to Grow Your eCommerce Subscription Business.'

Discover invaluable insights and strategies to enhance your online subscription business. Get your copy today and start your journey to eCommerce success.
Download our FREE Guide
Customer service lady smiling at the camera 1 |

Choosing I-Fulfilment for your eCommerce subscription business ensures that your brand maintains customer loyalty by delivering the right products, in perfect condition and on time. Our comprehensive services cover high-volume support, customised assembly, cost-effective shipping, real-time inventory management, and more.  

Make the smart choice for your eCommerce success and partner with a reliable expert in fulfillment. Contact I-Fulfilment today to get started. 

Book a Demo

Learn more about us on our social media channels.

Facebook-f Instagram Youtube Linkedin-in

GET READY FOR EXCLUSIVE TIPS, LOGISTIC TRENDS, AND EXPERT ADVICE TO BOOST YOUR BRAND'S SUCCESS.

I-fulfilment

Integrations

View All Integrations

Industries

Warehouses

Services

resources

© Copyright I-Fulfilment Ltd 2024

Services