What’s next for e-commerce? Despite retail stores opening back up in the last year, convenience and one-click checkouts are still gaining momentum over mall outings.
Through technological innovation and ever-changing consumer behaviors, online shopping is now easier than ever, which is why the sector is experiencing growth. One of the primary contributors to this success are subscription and membership businesses, which are able to deliver a frictionless and unique experience through recurring customer data.
“It’s imperative to understand who you’re selling products and services to on a deeper level,” stated SUBTA CEO Paul Chambers in the 2023 Subscription Commerce Industry Outlook Annual Report. “The only way you can entice consumers to develop brand loyalty is through constant, personalized communication, and a comprehensive library of data analytics that empower you to anticipate a customer’s needs before they even realize what’s missing.”
Read on to discover other emerging trends and predictions that will shape the future of e-commerce and your business’ strategies through membership, loyalty, and subscriptions.
The Evolving E-commerce Landscape
While technology and marketing tactics are constantly evolving, trends that have been observed throughout the last 12 months are just as noteworthy today as they were last year. Here are three critical trends every e-commerce business should leverage:
Zero-party data is not as hard to gather as one may think; 90% of consumers are happy to provide brands with personal data for rewards, according to Marigold, and many brands are taking advantage and implementing such loyalty programs.
Starbucks, McDonald’s, Target — among others — offer customers perks or reward points in exchange for an email address, birthday information, gender, and other personal data points that will help them personalize their approach with each person they advertise to.
So how come nearly 70% of retailers wish they had more intel on their customers ahead of the 2023 holiday season? Well, not all of them leverage loyalty and membership programs to tailor their approach.
Ask yourself the right questions if you think a loyalty program or a membership will help you strengthen the bond you’ve built with customers. What do you want to know about them? What do they love most about your product? Once you’ve answered those questions, time to think of your current offering as it stands: What can you gatekeep and offer via a loyalty program? It could be exclusive content like pre-sales, exclusive offers like free shipping, etc.
It’s crucial that you do not offer a loyalty program for the sake of having one. Create something customers want to be a part of and that they get actual value from. They can find a cheaper product/service elsewhere, so your job is to understand what will get them to trust you instead of your competition.
Amazon Prime raised consumers’ expectations toward fast and efficient shipping to the point that they will cancel a service if they experience shipping delays.
But if Amazon Prime didn’t do it, someone else would because consumers expect convenience at every turn — as the report suggests — whether it’s ordering groceries online so they can pick them up on their way home from work or paying a surcharge to receive a package on the same day because something urgent came up.
That is why a majority of customers say they subscribe to a brand because they need a specific product/service, according to an Attest survey conducted by SUBTA.
“We just want to use what we need when it’s needed,” said Tien Tzuo, Founder and CEO of Zuora, at SubSummit.
Bundles are also top of mind for consumers who crave easy access to the products and services they often consume — particularly in the streaming sector, as nearly 70% of U.S. consumers say they’d rather commit to a brand that offers the “perfect bundle” than multiple streaming services at once.
Walmart, Verizon, and Disney all offer bundles with various perks that provide their users with both convenience and a frictionless experience regardless of their needs.
In 2023, consumer brands are competing for the customers’ share of wallet. “This means that if you’re in the beauty industry, you’re competing with Netflix, for example,” explains Christopher George, CEO and Co-Founder of SubSummit. Bundles help overcome this challenge by offering multiple services at one fixed price point.
The future success of your e-commerce business could very well stem from new partnerships with brands that operate outside of your vertical. The best bundles are the ones that fulfill consumers’ needs, so identify what your target audience desires in order to establish the partnerships that will benefit them the most.
Direct-to-consumer businesses must strive to provide a frictionless experience from the moment a prospect lands on the site to the moment they receive a product — and beyond.
The best way to remove some of the hurdles customers have to jump over when purchasing a product is by offering a membership or subscription option, which automatically replenishes someone’s needs for a product or service. According to SubSummit research, this sector is valued at $2 trillion today and prevalent in virtually every vertical (digital, automotive, retail, food & beverage, streaming, media, etc.).
One-click checkout, in-app purchases, and fast-and-easy returns must be part of every e-commerce brand’s offering in order to build customer loyalty and experience repeat purchases.
Loyalty Programs and Membership Models Are the Future of E-Commerce
Data suggests that 80% of successful businesses’ revenue comes from existing subscribers, meaning that your acquisition efforts may not yield as big of results as investing in nurturing your community of customers.
In an era where consumers are overrun with options, businesses are seeking innovative ways to retain their customer base. Loyalty programs and membership models provide a solution by offering exclusive perks, discounts, and personalized experiences to repeat customers.
A majority of consumers — 65% — juggle between one and three membership programs while another 46% are enrolled in up to three loyalty programs, according to the 2023 Subscription Commerce Industry Outlook Annual Report. And while the two offerings are different, consumers revealed that they look for three overlapping perks before enrolling in either program:
- The membership/loyalty program has extra perks users want access to
- The membership/loyalty program helps save money on orders
- The membership/loyalty program is free
Yet, the most popular membership programs in the U.S. — Amazon Prime, Costco, Walmart+ and Sam’s Club — are not free, which means consumers are willing to pay for perks that fulfill their needs and focus on providing a convenient, personalized and frictionless experience.
AI’s Role in E-Commerce
In the 2023 Subscription Commerce Industry Outlook Annual Report, data shows AI is a powerful marketing to better engage with customers. Here is how marketers use AI to increase efficiencies:
- 32% use AI for paid advertising
- 22% use AI for product/content recommendations
- 18% use AI for account identification
- 32% use AI for personalized emails/offers
- 18% use it for predictive analysis
- 22% use AI for personalized subject lines
AI can help e-commerce brands build seamless automation while also providing engaging tools to analyze consumer behaviors and generate content. It can also be used to create a richer experience for customers via virtual reality or augmented reality.
Amazon, for example, allows users to see how a piece of furniture would fit in their house through a virtual mockup on the user’s phone.
Likewise, Apple released Apple Vision Pro, its immersive headset that lets users operate the device with speech, eye motions, and more instead of using a computer.
The Future of E-Commerce: What to Know
While the subscription and membership sector is full of opportunities for e-commerce brands to create a meaningful relationship with consumers, it’s important to not abuse the data they are willingly providing you in exchange for rewards, perks, or other incentives you may offer to personalize their shopping experiences.
The Federal Trade Commission (FTC) is proposing changes to its subscription regulations with a “Click-to-Cancel” rule — subscription businesses would be legally required to make it as easy for users to cancel as it is to subscribe.
While this proposed change has yet to be set in stone, promoting transparency and encouraging your customers to come and go as they please will not have the negative impact you might think.
“The likelihood to resubscribe goes up when it’s easier to cancel,” explained Haroon Mokhtarzada, CEO and Co-Founder of Rocket Money, at SubSummit. “If you have something you’ve canceled and you’re like, ‘Wow, that was super easy,’ you’re just more likely to subscribe to that again when you need it.”
In an era of usership, the customer comes first and being accommodating to their needs is what every e-commerce brand should prioritize. The best – and only way – to understand your customer is through the subscription, membership, and recurring revenue model.