5 Reasons to Offer Ecommerce Memberships Subscriptions

The ecommerce subscription model offers retailers several operational benefits, including relatively better marketing results, higher customer retention rates, improved margins, easy inventory management, and less expensive shipping.

Subscription ecommerce businesses take many different forms and serve many different niches. What they have in common is the sort of customer need or problem they address. Very often these problems or needs include some form of product replenishment, product discovery, or a service.

1. Return on Marketing Investment

Ecommerce subscription businesses should offer a very good return on the marketing investment since a newly acquired customer is likely to make repeated purchases.

For nearly any online retail business, new customer acquisition is common marketing goal. It can also be one of the most expensive marketing investments a business makes. But with a subscription service, your return on investment or return on advertising spend is almost certainly better than a business that offers only one-time sales.

2. High Customer Retention

The previous example assumed that your widget subscriber would cancel (churn) after just two orders. But in reality, your ecommerce subscription business might enjoy a better customer retention rate.

3. Good Retail Margins

Some ecommerce subscription businesses have reported better retail margins as compared to the those from one-time sales of individual products. While several factors can contribute to these improved margins, they result from either selling the products for more or having lower costs associated with selling the product.

4. Easy-to-manage Inventory

Your ability to optimize inventory, which lowers your costs, comes from knowing what you will sell ahead of time.

If you have 100 subscribers to your sardine-of-the month box, you know you will need at least 100 cans of this month’s sardines. This means that you can place the proper order from your sardine supplier with confidence, and if the quantity is sufficient, you may even get a better discount, placing orders for several months in advance.

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