The 3 Most Common Types of Subscription Models (And The Ecommerce Brands That Have Pulled Them Off)

22/09/2020, Marketing, Hannah Leary

It’s official, the UK is a nation of super-subscribers! Following huge lockdown-fueled growth in the subscription economy, we’re exploring the most common types of subscription models, why they’re so popular with consumers, and which ecommerce brands have implemented them successfully.

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Did you know that in the UK, each person spends an average of £552 on subscription retail services in just one year? Yes, it seems us Brits can’t resist a good subscription, especially when it comes to things like entertainment, food, grooming and health. 

 

The subscription economy has boomed over recent years, with a sizeable spike throughout the recent period of lockdown. In fact, according to research by Barclaycard Payments, the UK market grew by 39.4% year-on-year during July 2020, and is now valued at a whopping £323 million! 

 

Looking for their own piece of the subscription pie, 10% of UK retailers launched their first subscription service during lockdown, adding to the 28% who already offered this type of service beforehand.

 

Different retailers offer different types of subscription models depending on their industry, the products they sell and their target audience, amongst other factors. Subscription services offer a host of benefits for consumers and retailers alike, with some models boasting particular advantages to look out for. 

 

Today, we’ll be exploring the three most common types of subscription models and what makes them so popular with consumers and merchants. Plus, with a little help from Chase Alderton, Growth Marketing Manager at ReCharge, we’ll be looking at some stand-out examples of each service in action to get you inspired. Let’s get started.

 

#1 The curation model

 

Starting with the most popular model, we have the curation subscription service. Subscribers receive a unique selection of items on a regular basis, tailored to their personal needs and preferences

 

Why is this model popular with consumers?

 

First off, curation-based subscriptions satisfy shoppers’ increasing desire for personalisation. Receiving a monthly box of curated goodies contributes to an intricately tailored customer experience, making subscribers feel understood, valued and connected

 

There’s often an element of surprise with each subscription box too, building a sense of excitement and anticipation for each delivery. 

 

Not only this, but the curation model offers a great chance for consumers to discover new products that they haven’t tried before – usually in the form of product samples. They can test out these new items without the permanence of spending money on a full-size version – a major attraction for curious consumers!

 

What are the benefits for retailers?

 

Aside from the usual benefits that subscription ecommerce brings, such as increased return on customer acquisition costs, lower retention spend and better financial forecasting, the curation model is a valuable opportunity to build richer relationships with your customers

 

Armed with detailed knowledge of your subscribers’ preferences and usage behaviours, you can serve up personalised content at every step of the customer journey. By tailoring your messaging, ads and recommendations, you’ll be providing a memorable experience that encourages engagement and builds loyalty

 

Another big benefit of this type of subscription model is the organic brand amplification that comes with it. Enthused subscribers often spread the word about their latest subscription box amongst family and friends, as well as across their social channels. A monthly deluge of unboxing videos across social media is a great way to raise your profile and build your subscriber base.

 

Curation crowd-pleasers

 

From beauty goodies and books, to sleepwear and stationery, even chocolate and cheese, there’s a subscription box out there for just about any product you can think of! With curated subscriptions leading the pack as the most popular model, it’s no surprise that so many retailers are implementing tailored monthly boxes as part of their product offering.

 

We asked Chase Alderton, Growth Marketing Manager at leading ecommerce subscription platform ReCharge, for his favourite examples of the curation model in action: 

 

Hunt A Killer is certainly one to watch,” says Chase. “A curated mystery game to be solved at home using the unique pieces included in each box, the plot thickens every month with each new delivery. Users sign up for one of multiple games and discover new clues to the mystery in each box, with the chance to solve the crime and catch the killer in the sixth and final box.”

 

 

For brands in the jewellery industry looking for some subscription inspiration, Chase highlights Pura Vida and their popular Bracelet Club offering: “They offer a bracelet club where they deliver hand-selected bracelets on a monthly cadence. Subscribers can get a curated selection of bracelets of all types of styles and colours delivered directly to their door, making for a great monthly treat.”

 

 

#2 The replenishment model

 

With this type of subscription model, consumers can automate the purchase of commodity items so that they receive replenishment deliveries on a regular basis. Often referred to as a ‘subscribe and save’ model, this variation of subscription ecommerce is becoming increasingly popular in the food and drinks, health and wellness, and grooming industries.

 

Benefits for subscribers

 

Replenishment subscriptions represent the ultimate in convenience for the modern, time-poor consumer. Getting their desired consumables delivered direct to their door at regular intervals, and being able to set this up in just a few clicks, is an attractive prospect for shoppers.

 

Plus, not only does subscribing to a regular delivery save consumers time, it also enables them to save money on each order and monitor their expenditure more efficiently.

 

Advantages for merchants

 

Even if you sell the most commonplace of consumables, implementing a subscription service could add a competitive advantage to your brand. With customers signing up to regular deliveries at predetermined intervals, you’re ensured a consistent source of recurring revenue (providing you keep subscribers happy, of course!). 

 

Higher retention rates means increased customer lifetime value and much better return on customer acquisition spends. What’s more, you don’t need to eat away at your retention budget and invest in extensive remarketing.  

 

As a retailer offering a replenishment subscription, you can accurately predict what stock you need and when. You can anticipate demand and supply with more confidence than the traditional ecommerce business model allows, making your business processes much more consistent.

 

Replenishment subscription role-models

 

Which brands have pulled off the replenishment model best? Let’s hand back over to Chase from ReCharge to get his thoughts:

 

“The replenishment model is extremely popular with consumers. The ability to deliver the products a customer needs at the appropriate timeline is priceless.

 

For all the new parents out there, Hello Bello offers a super-convenient subscription diaper service, with bundles being delivered every four weeks. They release creative patterns and seasonal designs in all sizes and materials so babies can stay stylish each and every month!

 

 

1st Phorm is a fitness supplement company focused on helping you keep your workout routine strong. Whether it’s a pre-workout blend for weight-lifters or all types of vitamins, choose your supplements and get them delivered at bi-weekly or monthly intervals for consistency (plus, save money when you subscribe!).” 

 

 

 

#3 The access model

 

With access-focused subscriptions, subscribers pay a regular fee to obtain attractive member-only perks such as exclusive discounts or early access to new products. This type of subscription model is popular in the fashion, apparel and food verticals, as well as for brands selling digital subscriptions.

 

Key consumer value

 

It’s all about exclusivity with the access model. The allure of being the first to access new products or receiving limited discount codes is a key trigger for consumers to sign up to a subscription, with 53% citing exclusive content as their top sign-up reason in Barclaycard’s recent survey. Being part of a VIP club, part of an exclusive community of shoppers, makes them feel special.

 

What about the value for retailers?

 

Beyond the typical financial and forecasting benefits that come with subscription ecommerce, the access model is an effective way to foster loyalty, engagement and retention.

 

When customers feel special and valued, they’ll respond with loyalty towards your brand. Loyal shoppers will keep coming back for more, often spending more with each transaction. This rise in retention can then boost your bottom line!

 

Loyal customers are also more likely to recommend your membership program to others – saving you money on customer acquisition.

 

Access subscription in action

 

This type of subscription model is on the rise, but which brands have already implemented it successfully?

 

Eight Sleep is an innovative mattress company that provides access to a subscription mobile app to analyze each night’s sleep,” describes subscription expert Chase. “Buy the mattress once and pay monthly to continue to monitor your sleep each and every night. Members can also upgrade to the latest mattress technology at an exclusive price.”

 

 

Highlighting another brand who have successfully implemented the access subscription model, Chase mentions fan favourite, Freshly Picked: “This baby moccasins brand created a membership program called The Fringe where they give members access to discounts across the site, free shipping, and early product releases. They grow brand loyalty by offering subscription to an exclusive club where you can then purchase products within the membership.”

 

 

Final takeaway

 

Whether it’s signing up to a monthly box of surprise makeup products, getting a razor delivery on repeat, or paying a monthly fee for exclusive member-only perks from your favourite fashion brand, it’s safe to say that we’re living in a subscription society!

 

As we’ve seen, there are generally three types of subscription models popular with ecommerce businesses: curation, replenishment and access. The model that’s right for you will depend on your products, niche, USP and customer personas

 

We hope you’re feeling inspired after seeing each model in action (thanks Chase!), and ready to spice up your ecommerce operations with a swanky new subscription service.

 

Swanky: your subscription ecommerce experts

 

Here at Swanky, we really know our stuff when it comes to subscription services. We’ve completed three of ReCharge’s five largest migrations in the last year alone! 

 

Check out the story behind one of our subscription success stories, Friction Free Shaving, and find out how we created a sleek new site for this fast-growing cosmetics brand, complete with a silky smooth subscription flow, resulting in a 240% increase in revenue.

 

If you have a subscription business that needs a new home on Shopify Plus, or want to give your subscription site a swanky new makeover, get in touch with our team today.

 

Looking to update and grow your ecommerce store?

Swanky is an end-to-end Shopify Plus partner agency, with offices in the UK and Australia. As a leading ecommerce agency for design, development and growth services, we have spent years delivering innovative digital solutions that elevate our clients to the forefront of their industries. We’re committed to accelerating the growth of ambitious brands through the delivery of creative digital solutions and outstanding customer experiences.

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About the author

Hannah Leary

Hannah is Swanky's Content Manager and Copywriter. She enjoys researching the exciting world of ecommerce and crafting engaging articles to help ecommerce managers around the world make the most of their presence online. Her blogs specialise in ecommerce strategy, website design and store optimisation.

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