Back to Blog Subscription model and ecommerce fulfillment: a perfect duo
Ecommerce calendar    Apr 11, 2023

Subscription revolution. Why do customers subscribe instead of buying?

Subscription bins are the future of online business. See if they are the model for you!

Subscription models in all forms are gaining popularity day by day.

Whether you offer a subscription as regular product deliveries in exchange for monthly payments deducted directly from the customer's account, electronic product subscriptions where customers pay only for usage, or regular access to your services. All subscription models are increasingly becoming the chosen payment method for physical goods and services.

Customers are more into the subscription business model than ever

Customer needs evolve every day, and our business models should evolve with them. Customers increasingly value flexibility, and if it comes with savings, they don't need much convincing to opt for a given solution. This is why the subscription business model, in which the customer chooses a service once and pays for it a monthly or annual fee, is so successful in comparison to the traditional business model. Moreover, due to such regular payments, companies working with this relatively new business model can profit from recurring revenue and are somewhat less afraid of customer retention.

Right now we mostly acknowledge subscriptions with streaming services like Netlix, Spotify, etc. It is only the beginning of the possibilities that subscription models are preparing for us and not the only subscription option. Subscription based solutions have touched almost every market field that we can imagine. The reasons why they are getting more popular in those different fields are the same.

What is more, with younger generations of consumers, such as Gen Z and Millenials, particularly keen on it. Why? As many as 92% of young US citizens say they use at least one subscription model, praising the convenience of such solutions. And this is probably not their last word.

Gartner, on the other hand, reports that already by 2023, three-quarters of D2C companies will offer some kind of subscription service model, thus loyalising already acquired consumers. Relationships developed in this way will be supported by the absence of cumbersome manual payments, logistical problems every time an order is placed and time savings.

Subscription businesses: flexibility is the key

Subscription model enables access to what we need for low monthly payments. For instance, with hardware subscriptions implemented by companies like WeSub, we pay only for the opportunity to use and access the technology, not for the real value of the item.

As a result, we can use the latest devices that flood the market every year, paying only a fraction of their price and regularly replacing them without worrying about selling or disposing of them later. This results in a really high level of customer satisfaction with the services provided and a profitable business - with relatively low customer acquisition costs.

In the case of service subscription based business, flexibility is also the main feature. Let's take the example of accounting and HR services. A company's needs can change from month to month, so we subscribe to a package of services that we will realistically use in the near future.

Subscription business models are often associated with convenience and time savings, as customers have products delivered regularly without the need to purchase, search, or distribute the item that is no longer useful.

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In the case of electronic device subscription business, customers also avoid the need for repair and finding a suitable service. All problematic issues are resolved by the subscription provider. Customers only enjoy the best features of the subscribed device, including constant access to new technology.

Subscription models: keep the quality on the same level

Another argument in favor of subscription based business model is the constant quality of products. Companies offering subscriptions are committed to delivering high-quality products, so each order maintains the appropriate level and fully satisfies the customer. Otherwise, they will give up using our products, and we will lose our monthly income.

Unlike one-time sales, subscriptions allow us to build a relationship with the customer, and how long they stay with us depends on the quality of the services provided. It gives us a chance to regularly show that the customer is important to us, and that we care about their satisfaction at every stage of the transaction.

The business model that is based on subscriptions is basically all about maintaining high quality and constantly trying to improve it.

Additionally, subscribing to electronic devices allows us to have constant access to premier devices. A standard hardware subscription lasts for 12 months, but after just six months, we can replace it with newer ones if we feel the need.

Subscription service is associated with much lower costs than buying, installments, or leasing of the device, and eliminates the need of long term commitment.

Technological solutions that manufacturers offer us, competing every year in inventing tools that will give us even more benefits from using their products, are definitely worth testing.

With a subscription, we don't have to limit ourselves and use devices that will become obsolete after a year or two.

Maintaining a constant quality of the devices we use affects all aspects of our lives.

It is obvious that working on good equipment is faster and more efficient. We don't have to wait for a program to finally start, we have greater disk capacity so we can store all information in one place, and advanced processors allow us to perform more tasks simultaneously. Working on an old laptop can be frustrating and simply inefficient.

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It has even more value when it comes to smartphones that can already replace a lot of other devices. A great example is the camera built into the phone, most users fully replace separate devices with it.

Here, as in the case of laptops, it is also about speed of operation. As a society, we live in an ever-increasing constant rush and often have to react quickly or have a limited amount of time. It makes no sense to waste it waiting for a particular application to finally start or for the screen to stop freezing.

Good technology significantly affects our comfort, capabilities, and development

 The subscription model also involves savings. By committing to regular payments of products, we usually receive a discount, which makes it significantly more cost-effective for us than placing individual orders.

Of course, this is a trick that is meant to encourage the customer to stay longer, but at the same time, it simply pays off for them. Everyone benefits from this arrangement. In addition to discounts on ordered products, we often also receive a discount on planned deliveries.

By subscribing to equipment, we avoid the need for large, one-time investments, while not committing ourselves to the item permanently. We do not have to wonder when we can replace the equipment to make its purchase profitable, and for how much we must sell it to at least break even.

Most of us regularly replace our phone anyway, often finally just throwing it into a drawer, postponing its sale for later, later, and still later. So why buy it when you can subscribe to it, pay only for use, and replace it with a newer one after a year without hesitation?

The subscription model is a great solution for business. Regardless of whether you want to subscribe or add a subscription to your offer.

Subscription offers created by WeSub allow the selection of various products within one Subscription Agreement, which is associated with one monthly VAT invoice for the service. This means that the subscription fee can easily be included in the cost of customer business.

Importantly, subscriptions, unlike leasing, are not an obligation, but a service. It does not affect our creditworthiness and does not hinder us from obtaining another financing.

Benefits for companies: develop business according to the subscription economy

The subscription model helps us build relationships with customers, as it provides many more opportunities for interaction than a one-time sale as it is not only a single purchase. It allows us to bring our customer experience to the next level.

We can regularly contact the customer to ensure the quality of our services, their satisfaction, and feedback. The customer feels cared for throughout the duration of the subscription. A one-time purchase is an easy way to let customers go and doesn't give a chance to gain customer loyalty.

So why bet on a subscription model from a company perspective? Find out the most important reasons:

  1. Subscribing to devices involves offering additional services such as servicing, insurance, or additional protective packages.

    This way, the customer doesn't have to worry about using the device, as they know that in case of any accidents, we will help them repair their equipment.

  2. Offering value-added services directly related to the subscription also gives us as entrepreneurs the opportunity for additional earnings.

    We can create new services and packages ourselves, which our customers will have the opportunity to use if needed. After all, many of us appreciate when a service provider can meet our needs in many areas. And let's face it - in the age of data-driven marketing, we know our ideal customer profiles very well; so it's all the easier to offer them something more.

    By offering laptop subscriptions, we can for example create additional protective packages that will enable customers to exchange their screens. We can offer additional items like laptops case, and protective foils or install an application package that will be useful to them even before delivering the equipment.

In reality, our only limitation is our imagination. There are a lot of possibilities associated with subscriptions that can easily help us get more revenue.

  1. Subscription business model is also a great way to acquire new customers and grow your product sales.

We must face the truth and admit that not everyone can afford an expensive computer, camera, or new beauty salon device. The budget simply limits a large part of our potential customers.

Subscription businesses can significantly reduce the barriers to entry, offering the use of our items for the lowest monthly fee. Our customers will be able to afford to choose more expensive and higher quality devices, as they will not be obligated to pay their full value.

You don't have to open a new business or totally rearrange your current one to start offering subscription services.

  1. Subscription economy is a business model that can be easily implemented in almost every company.

Subscription companies like WeSub have created tools based on their many years of experience that can help implement subscription as a payment method in your store in a simple way. 

It doesn't have to become the core of your business, but it can definitely be a way to gain additional revenue, acquire more customers, and maintain relationships with existing ones by providing them with the best customer experience ever.

The implementation of subscriptions is completely free, with tools selected and implemented with the support of specialists.

  1. Customers like to have a choice.

Therefore, we should provide our customers with as many options as possible to acquire the items or services we offer. By having a full range of payment options in our offer, we can be sure that everyone will find a model that is suitable for them and their current needs. The customer experience will for sure benefit on it too.

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Summing Up

Subscription based business models are gaining in popularity thanks to unique value proposition and to fitting in consumer preferences (especially those from younger generations). Let's agree - subscription payments definitely makes life easier and saves time and effort.

Join the industrial revolution - gain a competitive advantage, benefit from predictable revenue, avoid one off purchases and become the leader of digital transformation!

Marketing Specialist at WeSub, for over 3 years she has been specializing in spreading the idea of the subscription economy. She also works intensively to spread knowledge and awareness about the circular economy as an economy of the future.

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