Consider subscription as strategy for your CPG eCommerce brand

Consider subscription as strategy for your CPG eCommerce brand

Ecommerce subscriptions offer great advantages for online stores and consumers. First, eCommerce can increase customer retention through loyalty and automatic recurring purchases. It also frees customers from having to buy the same product over and over again.

The subscription business model has been around for some time in software-as-a-service solutions, with popular platforms such as Netflix and Spotify. But recently, it has also been a strong trend in eCommerce, as there are multiple ways to engage the customer.

CPG (Consumer Packaged Goods) has become popular in the sale of cosmetics, food, and cleaning products, as well as in other sectors. By charging the customer on a recurring basis and providing the same product or package of products, a strong relationship is created between the brand and the customer, which becomes a source of recurring revenue and contributes to increasing the customer's life cycle.

Learn how your online store could benefit from implementing eCommerce subscriptions to convert product sales into a subscription service.

What are the benefits of eCommerce conversions?

Retail businesses have typically been characterized by the inability to predict the level of total revenue accurately. In the case of subscription models, businesses rely on pre-planned purchases that provide recurring revenue. For example, through the monthly purchase of a cosmetic product sized for use lasting about 4-5 weeks.

1. Help you prevent fluctuations in the market

Knowing that your online store has a certain number of subscriptions and a secure income allows you to prepare for the ups and downs of the market. Advertising costs may increase, unforeseen situations such as Covid-19 or an industry crisis may occur, or your online store may suffer a cyber-attack. But if you have a sufficient volume of subscriptions, you have a margin of maneuver that would not exist if all your income depends on day-to-day purchases.

2. Useful for improving inventory management

When you know the number of units to be sold in the coming month, it is easier to adapt production and manage inventory. You know when to buy more stock, especially in the case of retail stores, or if you cover the entire supply chain, you can more effectively predict sales volume to adjust production and avoid inventory stock-outs.

3. Improve your financial strategy

When your online store has a secure and recurring income, you can better plan your purchases during low sales seasons. This way, you avoid taking unnecessary risks in case you cannot make an accurate prediction about the success or failure of a campaign or the sales that will occur during a given period.

4. Increase customer retention

Getting customers to subscribe to weekly, monthly, bi-monthly, bi-monthly, or quarterly product shipments helps them build a relationship with your brand. Customer churn rates are much lower. They don't have to go through the effort of repurchasing the same product or package over and over again in your store every time they run out.

A person who has to buy a product online can easily get tired of it or forget about it. It is much more convenient when we allow the customer to plan their purchases over the long term, avoiding them having to go through the checkout again.

5. Pricing is made easier

Subscription-based e-commerce allows you to set an overall price for a bundle of products. This makes it more attractive to the customer compared to having to buy the product individually and also helps to achieve a higher purchase transaction. Online stores can also offer additional benefits, such as free shipping costs, as a higher purchase volume is guaranteed.

6. It is key to selling new products

The chances of selling additional products to a customer who is already a subscriber are much higher than to a customer who comes to your store for the first time. Subscriptions allow you to build customer loyalty and gain their trust, which makes it easier for them to purchase additional products.

In fact, you can segment your customer database by subscription and send emails to offer related products or even new subscriptions that fit the customer's profile.

7. Better analysis of your online store's data

Subscription-based businesses allow you to analyze your online store data better. By predicting revenue and sales more accurately, you can develop strategies that take this data into account to increase the purchased ticket, get new subscriptions from already subscribed customers, or get customers who subscribe to one product to buy another one individually.

This information can help you improve your cross-selling and up-selling strategy, as well as offer a more personalized service to your customers. The data you have accumulated about your subscribers also provides you with information to increase customer acquisition and optimize your marketing strategy.

The future of eCommerce lies in the subscription model.

Many retailers can gain stability by implementing the subscription model. Subscription-based online stores are experiencing higher revenue growth than companies that are limited to online retail.

Put subscriptions at the center of your strategy for peak season success

Launching or leveraging a subscription offer for Black Friday and Cyber ​​Monday is better than relying on discounts alone.

Limited-time discounts. Coupons. Bundled offers. Referral discounts. Strategies to boost Black Friday and Cyber ​​Monday (BFCM) sales are endless. Why? Because they work. According to Shopify , 97% of retailers cite discounting as their top pricing strategy.

This time of the year, customers expect to see discounted prices. Some may have been delaying a purchase decision to check the possible Black Friday discounted price. For businesses, the problem with this customer behavior is the Lifetime Value (LTV) of this customer may not justify the discount. You've slashed your margins to get the sale and win on volume, but at the end of the day, what's the percentage of customers that will buy from you at a regular price?

So while it's undeniable these different kinds of offers can help stores boost sales in the short-term, long-term thinking is critical. Adding subscriptions to your BFCM strategy creates the opportunity for a percentage of those increased sales to become recurring and last much longer once the gift-giving season is over.

Looking for how to implement a subscription in your BFCM?

Instead of discounts, offer a free gift with a subscription

The free-gift-with-purchase is a sales tactic used to entice and convert buyers. Offering a discount or providing free shipping can sometimes be seen as taking away from the value of the product. The free gift with subscription, though, is used to add value to the subscription program. It encourages customers to buy by providing more for the same price.

Generally, gifts are also exclusive and limited. They are offered as a promotion, meaning that the gift is only offered for a set period of time or “while supplies last.” This is meant to increase the exclusivity and urgency of the promotion that other discounts might not have the ability to do. BFCM is the perfect opportunity to set up a “limited-time deal” and create that sense of urgency.

If you are looking for a way to implement the subscription model in your eCommerce, we at Webmefy can help you lay the foundation for an online store with a model that will help you increase customer retention, sales and profitability.