The State of the Subscription Economy

For anyone who knows me, they've definitely heard my touting the virtues of subscription models. I'm a huge fan. Why? Its simple. eCommerce growth comes largely from three pillars: Customers, Cart/Basket sizes, and Frequency. Subscriptions touch all three growth pillars. It's also relationship based which is how the best commerce is done and when done right, consumers win through time savings and having their needs and desires met.

"Importantly, the benefits of subscriptions aren’t just seen as transactional or incidental. They actually have a cumulative, qualitative effect on building a relationship between brands and consumers." - The End of Ownership

Subscriptions aren't a byproduct of online commerce, they just make a lot of sense in it. In 1878, the milk bottle was patented and consumers didn't have to collectively share milk with their neighbours. Homes didn’t have refrigeration, so daily milk delivery was a necessity for many. This was replaced in the 1940s with refrigeration, milk cartons, and pasteurisation not to mention an outward move to the suburbs. Technology did away with the milkman.

Same thing for the icebox and daily ice delivery.

Many of us subscribe to Netflix, Stan or Disney Plus - or all three! Some of us even have an Amazon Prime subscription that serves both media content while providing Amazon with a stickier moat and consumers with faster gig-delivered orders across 7 days. Maybe you have been a Who Gives a Crap toilet paper subscriber? Maybe you receive razorblades from Dollar Shave Club? bellabox, GoodnessMe, Manflower, Nutrition Life ... there are 100s even in Australia.

Most companies have an opportunity to bring subscriptions and recurring revenue into the mix. Beauty and accessories are fantastic range extensions for most fashion brands and a great way to start increasing incremental sales is through subscription.

But this is entry level stuff.

There's a handful of items that I purchase every week or two, including coffee beans and La Tortilleria tortilla chips. My local coffee & tea purveyor brings in a specific bean, roasted a certain way and ground perfectly for my pour over method. I don't like to buy too much as I want it fresh. I'd love a recurring subscription for both of these items just like my biltong (South African style beef jerky) that I buy from Krave biltong. Ellis makes a fine biltong and is the real Mr. consistent with spice and flavour - super rare against local varieties which taste different every time (maybe that's their USP).

As an eCommerce leader you should be thinking about subscription. It's pretty easy to integrate into Shopify and other platforms with Recharge and Stripe has options if you want to build it into your stack natively. But it doesn't even have to be that sophisticated to get started. Your existing systems should be able to handle this - it's the backend features that make a Recharge solution worthwhile as churn is real and you need to make it easy to get off and on the subscription bus or risk higher churn rates.

Subscription Growth Surpasses Retail

How about a subscription for specialty books, children's books, coffee, tea, food & grocery, bakery, records, toys, wine & beer, chocolate and lollies, pet toys, consumables (any), jewellery, inspirational mugs (channelling Sara Blakely who has more inspiration quote mugs than anyone), haircare, baby goods, baking, gardening, t-shirts, seafood, skincare, beauty ... OK, the possibilities are endless.

My vision of subscription goes much further. I believe there will be a day when I can create a standing order with ANY retailer, restaurant or service. Like my local dry cleaners, fish & chips or bookstore. None of these businesses currently offer subscriptions. That's been their disruption by digital players. I bet my local coffee roaster could see fantastic multipliers if they delivered weekly standing orders. Same with retailers like Hairhouse e.g. Shampoo and styling products ...

We need to see software investments that empower local retailers and businesses through their point of sale, accounting platform or even payment provider. Empower local businesses to compete in the digital economy - and also to ensure I get my coffee and corn chips.

About Mike Fowler

Mike is an eCommerce veteran, senior leader & growth strategist for some of Australia's best retailers. Formerly at Afterpay as Director of Merchant Services APAC, General Manager and founder of the growth team at Mosaic Brands (Noni B Group) developing and launching 9 iconic multi-category online marketplaces, including: Noni B, Rockmans, Millers, and Rivers, as well as Head of Digital at Blue Illusion. Member of the Australia Post Customer Advisory Group with more than 15 years experience in helping retailers leverage eCommerce, CX, payments, & logistics opportunities to maximise growth.