Subscription commerce
What is subscription commerce?
Subscription commerce is a business model in which companies offer products or services on a recurring basis, such as weekly, monthly, or annually. This includes a wide range of offerings, from software-as-a-service (SaaS) and subscription boxes (like meal kits or pet supplies) to streaming services and membership-based platforms. Performance is typically measured using metrics like monthly recurring revenue (MRR) and annual recurring revenue (ARR).
Why do consumers favour subscriptions?
From the customer’s point of view, subscriptions offer convenience and simplicity. Once payment details are provided at sign-up, deliveries or service access continue automatically, saving time and effort. Many subscription services also offer cost savings through “subscribe and save” discounts, adding further appeal for consumers who regularly purchase the same products.
How do businesses benefit from subscription commerce?
For businesses, subscription commerce provides a consistent and predictable revenue stream, which makes financial forecasting and inventory management more efficient. It also offers opportunities to increase average order value (AOV) and customer lifetime value (CLV). When enhanced with personalisation options such as cross-sells, upsells, and flexible subscription features, like skipping deliveries or swapping products, subscription businesses can reduce churn and strengthen customer loyalty. These added layers of flexibility and customisation help improve the overall customer experience and create longer-lasting relationships with subscribers. In short, when implemented effectively, subscription commerce can be a powerful tool for sustainable growth and customer retention across industries.
