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Let the river flow: direct-to-consumer converges with subscriptions

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Direct-to-consumer and subscription based commerce will play a massive role in the Consumers Products industry, and if you aren’t already incorporating them into your business, you should minimally be thinking about it. The tricky part is figuring out how to add this emerging business model in a meaningful way to your B2B and B2C customers, without breaking the bank, says Marco Trezzi, Global Industry Principal at SAP Hybris.

Direct-to-consumer subscriptions are a delivery medium, and the difficult issue is knowing what to offer each consumer,” Trezzi noted, “At the end of the day, it’s moving from carts to hearts: you need to know your customer and how to make each experience unique.”

Oceans of opportunity

Billing, marketing and commerce flow together to create a successful subscription model. Consumer Products companies have two types of customers: B2B and B2C, and subscriptions have altered the dynamics of how they do business, and will continue to do so.

Products that were previously available only through a retailer are now becoming available directly to the consumer. Instead of going to a store to purchase your favorite soda or personal care item, why not order it directly from the brand, and cut out that step? That thought process is what’s driving the growth of direct-to-consumer subscriptions, but it has some flaws.

While subscriptions can offer a way to avert the retailer, it isn’t fiscally feasible to solely use subscriptions to reach your audience if you’re a large established brand. Instead, consumer products companies need to focus on what they can offer consumers directly, and how they can also keep their relationships with their indirect channels, represented by modern and traditional retailers who sell many of their products.

The balance within this relationship is more important than ever to retailers, and the space that lies between B2B and B2C subscriptions is where you’ll find the most opportunity for growth.

Subscriptions: not just for big brands

One of the biggest mistakes business owners can make is believing that if you have a small business, you don’t need subscriptions. In reality, subscriptions offer a way to both infuse revenue and create specialty services for customers that make your product or brand unique, thereby offering up unique experiences each time for clients.

Happy. Pretty. Lifestyle Design in Midland, MI, home of Dow Chemical and Dow Corning, offers a niche subscription service that has bolstered their bottom line and created loyal customers.

Owner Melanie Marshall told her business manager that she wanted to create a bloom bar within her store, where customers could come and get fresh flowers each week. “There’s a catch,” her manager replied, “You can’t just have flowers in the store, you also have to sell them.” And thus, a flower subscription service was born.

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Melanie customized her subscription options for her clients, providing three tiers of price points, weekly, bi-weekly, or monthly subscriptions, and whether they’d like the flowers delivered or if they’d like to select them by coming into the store.

“Subscriptions really made a fantastic difference for Happy. Pretty.,” said Marshall, “They’ve allowed me to have amazing flowers in the store each week, which makes the store unique, and they’ve also been a big boost to the bottom line. It’s the best of both worlds.”

Data anchors everything

The most successful subscription services will tie together unique experiences for the customer, a simplified billing model, and a steady revenue stream. Data is critical to all three of these factors.

If you’re selling subscriptions, or planning to, data is a crucial asset that cannot be overlooked. Utilizing an omni-channel approach to offer the very best products to your customers, in the way that they’d like to see it offered will make or break your subscription service.

SAP Hybris can help you engage your customers in the moment, and teach you how to create successful direct-to-consumer subscription services for leading and emerging brands in the Consumer Products industry. To find out how to transform your business with subscriptions, go here

 

Jenn Vande Zande
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June 14, 2017
Jenn Vande Zande

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