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The New E-Commerce Transformation is Subscription Based and Coming to your Door

  • Jesus Luzardo - Vice President, Head of Growth
  • May 3, 2021
  • 5 minute read
  • Vindicia

In every phase of your subscription journey, use Vindicia MarketOne to understand your users, bundle subscriptions for personalized packages that express each consumer’s identity, and enable customers to manage all their subscriptions in a single location, seamlessly. Unlock endless opportunities to delight customers and improve their experience, building stronger and longer brand relationships.

We’re seeing a total revolution in the consumer economy. Today’s customers aren’t just choosing brands based on price or products; they’re choosing brands that make a statement about their identity. 

You can’t expect customers to stay loyal to your brand just because they always bought from you in the past; in fact, only 10% of consumers say that “familiarity” plays a role in their purchase choices. In 2021, brands have to earn customer loyalty, and one of the best ways of doing that is by upping your subscription offering.

What You Buy Defines Your Identity

Today’s consumers focus on identifying with a brand. It’s been growing for a while — just think about the way that Mac aficionados always lorded it over Windows owners. In 2021, identity shopping is more important than ever. Every brand offers a promise to connect the customer to other like-minded brand members, and by choosing their brand, consumers also choose their tribe. 

Fitness enthusiasts identify themselves as Nike, Under Armor, or Lululemon wearers, or proudly proclaim themselves niche Sweaty Betty lovers. Foodies unite by loving — or hating — Trader Joe’s. Bookworms bond over their membership in Oprah’s book club vs. the Duchess of Cornwall’s. 

Shoppers are looking for brands that express their identity, and that reaches a peak when it comes to subscription choices. The question is, what does your brand say about your customers?

Subscriptions Personalize the Remote Shopping Experience

Consumers are exposed to several experiences and offerings hourly, daily, but there is a growing sentiment and expectation about exceptional experience and personalized subscription services; a recent Deloitte Study found that 36% of customers are interested in buying personalized products. If a billboard says “I’m here,” personalized communications say “I’m here for you!” 

That doesn’t just mean personalizing your social media messaging or your email newsletters; it also means creating a community to which consumers can feel personally connected. 83% of consumers want to feel an emotional connection with brands, and personalization is where the emotional relationship is created. 

Subscriptions also offer a lot of potential for personalization. Netflix and Disney+ use data to offer personalized viewing suggestions; book-of-the-month subscriptions invite members to customize reading options by category, genre, and author; beauty boxes curate selections to the customer’s skin tone and style preferences. Subscriptions offer numerous opportunities to personalize the interaction and build that relationship

Consumers want to feel that their brand choices make a statement about their personality, interests, and values, and subscriptions do this much more effectively than individual purchases.

If a purchase is a one-night stand, a subscription puts a ring on it. For example, Equinox members love not just the services, but also what it says about them to be Equinox members. It’s not a purely functional choice, but an emotional one.

This kind of relationship only exists when there’s choice, though. No one feels emotional about their subscription to their home electricity or water service utility, because they didn’t choose those services, and that has a lot to do with why many people resent having to pay those bills. But consumers rarely complain about their Spotify, Goop, Chopra, or even McAfee antivirus payments, because those relationships were freely chosen.

The Subscription E-Commerce Market is Booming

While Covid-19 had a negative effect on much of the economy, the subscription market, and particularly subscription e-commerce, is booming. S&P 500 retail companies saw sales shrink by an average of 10% in 2020, but subscription businesses grew by about 12% in the same timeframe, and OTT video streaming, digital media, and eLearning companies saw subscriptions grow by over 25%. Research predicts that the subscription e-commerce market will grow by 68% CAGR to nearly $480 billion by 2025, and some regions saw growth rates of close to 100% in the past year. 

Covid-19 accelerated an existing trend, and it’s not likely to reverse once the pandemic eases up, either. For more than a year, people have been unable or unwilling to enter stores, and now they’ve grown accustomed to the convenience of having products arrive at their device or door on a regular basis. 

Subscriptions offer a sense of safety in a dangerous world in many ways. Stress levels were and still are high, and people are grateful to let go of the anxiety of remembering to refill ink cartridges in the print or restock on dog food. The same holds true during “normal” times, when the non-stop round of work, shop, socialize, family, workout, and more can be overwhelming. According to a research performed by Paysafe and mentioned by SmallBizTrends, 27% of consumers expect to see their subscription to increase this year, due to the convenience and safety associated with subscription services. Consumers are more than ready for their cosmetics, groceries, and household goods to refill automatically, for their devices to be constantly connected and protected, and for media to be ever ready. It’s one less thing to worry about in a relentless life that’s always on.

That gratitude helps forge a deeper relationship that feels closer than one that’s purely commercial. Savvy subscription brands like Peloton created a community on social media that helps people feel connected at a time when they couldn’t socialize in person, through members’ features like the leaderboard, Tags, High Fives, Here Now, Following Friends, Video Chatting and the Peloton members page, attracting consumers that want to be part of their growing fitness crazy community. 

With all these emotions swirling around subscriptions, it’s not surprising that by 2023, close to 75% of DTC companies are likely to offer subscription services. 

Subscriptions are based on trust

Unlike the in-store shopping experience, the subscription economy is ruled by trust. Luminary podcast subscribers trust that they’ll find content they’ll enjoy; Birchbox subscribers trust that the beauty products will match their vibe; and Farmbox organic produce subscribers trust that they’ll delight in each week’s fruit and vegetables.

If you let down your consumers, they’ll leave you far more quickly than regular customers. That’s why it’s crucial to ensure that you build trust with every interaction. Your products and services have to be top-quality; that’s already a given. But you also need to invest in friction-free purchase journeys, customer support, and renewal experiences.

Are you looking to learn more about the latest e-commerce subscription trends? Join SUBTA. We’re a community of doers, excited to share insights, make connections and grow your subscription brand.