Last updated: How subscription commerce is transforming retail

How subscription commerce is transforming retail


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Innovators are quickly entering and creating new markets — and subscription commerce is a big part of it. Just look at how companies like Birchbox, RocksBox, and StitchFix have changed the way consumers shop by using a subscription-based model. This approach helps brands gain critical customer data that can be used to retain customers in an evolving and competitive market while boosting revenue streams.

These retailers are entering new territory inundated with fierce competitors and disruptors. To be successful, they need to take critical steps beforehand. For this reason, retailers need to be agile and able to align with industry trends as they occur.

Look at Dollar Shave Club (DSC), one of the first subscription-based models in the razor industry. As more competitors entered the space, DSC needed a way to differentiate and maintain its position as the first mover in the personal grooming market. DSC was able to determine that virtually none of its members used skin care products after shaving. So, the company used its industry expertise and brand awareness to launch a skin-care line made available exclusively to members, making it simpler for them to purchase the product and integrate it into their daily routine and budgets.

In order for this model to be effective, all customer engagement data must be captured and analyzed in real time. Retailers can use this information to inform incentives, customer loyalty programs, product road maps and more. They can also take advantage of this data to create strong customer profiles and deliver personalized, contextualized experiences across multiple touch-points. Over time, brands can use the historic and continually updated data to provide personalized messages based on each customer’s unique preferences and data. Ultimately, this helps to foster a long-term relationship built on trust and loyalty.

Lastly, when using a subscription model, retailers should re-evaluate their partner networks’ value chains to identify businesses willing to share revenue streams and quickly grow their customer base. Partners should be seen as comrades in the move to digital subscriptions. By bundling their products or services with those of their partners, brands can offer a stronger value proposition to the end customer.

One successful example is Birchbox, a leading disruptor that’s strategically partnered with the right brands to create a service that customers want. Birchbox follows a subscription model whereby members receive samples of cosmetics and a range of health and beauty aids each month. By partnering with well-known brands, Birchbox has expanded its customer base to reach additional shoppers interested in its partners’ products. Birchbox partners also benefit by increasing their brand awareness and introducing their products to new customers, which will likely yield additional sales.

While brick-and-mortar stores certainly aren’t going anywhere, the retailers that will succeed in the digital economy are those catering to customers across channels and providing individualized shopping experiences.

When a subscription commerce model is successful, it can boost revenue, enhance customer loyalty and bring in new customers. With consumers driving their own shopping experiences, the subscription model gives retailers both the flexibility and data needed to give customers what they really want.

Rev up revenue.
Gain loyalty.

Innovate NOW. 

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