Who Killed Subscription Commerce (And Is It Really Dead)?

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Subscription Commerce

Original Image by ‘MarcelGermain’

Most people will tell you that subscription commerce is the new non-subscription commerce.  Not many will start at the beginning and talk about the death of this form of marketing.  To be fair to this tried, tested and seriously over-done sales model, it’s not actually dead.  Languishing maybe, on life support, but not dead.  Like so many tricks of sales and marketing it has even seen something of a second childhood, thanks to the internet.  There are even some internet marketers who think that it’s a new approach to sales.

Subscription Commerce

Subscription Commerce

Choice Overload

Subscription commerce has been seriously hit by the choice on offer courtesy of the internet.  In the past a range of services from milk delivery to book club membership provided goods via the same model.  However, today with voucher code sites taking on a social media approach and a discount-shop-till experience only a click away, many consumers have turned their back on this type of purchasing.  Why pay an extra bill and wait a whole month when you can mimic people with better taste than you via the wonders of Fancy or Pinterest?

Consumers have voted with their mouse fingers and the internet and the associated choice it offers have, by and large, been responsible for the near fatal blow to subscription commerce.

There’s Life In The Old Sales Trick Yet

However, in the last few years, particularly during the recession, a number of companies have re-invented the model for the eCommerce age.  This is understandable, as a core of repeat customers seems to be a more attractive option than continually trying to beguile new customers in an age where budgets are tight, purses and wallets sealed and consumers far too savvy for any salesperson’s own good.  Despite this potentially rich seam of success, many subscription commerce sites hit a number of difficult issues and fail within only a few months.

Subscription Commerce Is Easy Though, Right?

No, it’s hard; it’s really, really hard!!!

Subscription commerce is one of those fairy tale sort of business models a little like that goose that lays the golden eggs (and who hasn’t been trying to get their hands on one of those for years).  The concept is, naturally, attractive.  Repeat customers, every month making repeat payments; it all sounds so one click-ishly simple and (almost) too good to be true.  The problem is finding those subscribers in the first place and then, in the second place,  keeping hold of them.  Especially in these tough economic times people are less than willing to sign up for another monthly bill, even if it’s a fun one.

A good example has been the number of vegetable box providers falling on their marrows in recent years as they’ve seen sales and sign-ups slum.  Social media campaigns are one of the best ways to get the word out and build a following (and subscriber list) but be prepared for a slow sign up rate and don’t expect this marketing magic spell to work overnight.

A Host of Missing Payments

Subscription commerce is not new, but it is new to the internet and especially to most e-commerce platforms.  This can mean that managing subscription payments may leave the fingers pointing at you when your payment solution provider is found lifeless in the library.  Many systems are simply not set up to manage subscriptions efficiently.  When your list of subscribers is inadvertently not renewed and it takes a few weeks to sort the problem the ensuing customer relationship storm can be enough to sink your enterprise.  There are, thankfully, a growing number of specialist subscription payment management providers, and however cheap the alternatives may appear – even the well known global leading kind – it pays to invest in a provider who works specifically for subscription commerce.  Many of these firms are, as yet, small operations but this has one huge advantage if things do go wrong; you’re not left in a Chinese whispers email conversation with a string of confused customer ‘service’ advisers.

Thinking Inside The Box

Subscription commerce may, or may not, work for most products but in reality the big successes have been niche markets.  A very old fashioned subscription service was the daily doorstep milk delivery, which has transformed itself into the fruit or vegetable box scheme.

In the modern day version of subscription commerce the undoubted big success has been Birchbox, who provide cosmetic and grooming sample products for the humble price of $10 a month (the samples cost the company nothing, or next to nothing).  Other innovative subscription commerce companies include Boinkbox who provide a monthly delivery of, erm, “adult” focused products.

Birchbox turns the concept of something for nothing into something from nothing while Boinkbox offers a solution to its clients who would prefer not to be on first name terms with the assistants in the local “adult interests” store.  In both cases the companies have thought their products and strategy through very carefully.

Do you think subscription commerce is dead, or do you think there is a place for it online?  Please let us know by leaving a comment below!

About Carlo Pandian

Carlo is a freelance writer and reviews business and finance tools, from online accounting software by Intuit, to social media marketing dashboards such as TweetReach and Radian6. He also loves sharing business tips with e-commerce entrepreneurs and speaking about how the Internet can help boost your sales. You can learn more by following him on Twitter or Google+.

  • Andi Leeman

    Very interesting post, subscription model is far from dead, think of your gas bill, your phone bill and your satellite TV bill… it is very live and kicking.

    My boss loves the model and have just set up another one this week, but as you say the payment systems can be a real nightmare, with our new product we are doing 3 months reduced rate offer but the system we are using it is causing a lot of issues lol.

    However we will get it sorted and we will have one very happy boss. I think everyone needs a subscription product and keep the money coming in.

    • http://onlineincometeacher.com/ Matt Smith

      Hi Andi,

      I think we will see more subscription based models used by sites in the future. Of course the key is building up a loyal following that want to stay subscribed, which is no easy feat. That said, there are plenty of sites that are doing it successfully.

      To cover your bases, a site could always promote traditional eCommerce based products along side a subscription model. That way, you get the best of both worlds. :)