Sep 7, 2021 | 9 minute read
written by Hannah Jarrett
It wasn’t too long ago that I was in my local Whole Foods, staring blankly at what felt like 400 different types of vitamins. You see, I had run out of my latest bottle and after three weeks of putting it off, I was on a mission to restock. But, by the time I finished the heroic act of grocery shopping, this wall of vitamin brands, each with their own inspiring guarantee (“brighter skin”, “longer hair”, “no more colds!”) felt extremely daunting.
As my stomach rumbled for dinner, I turned away and headed to the checkout line, promising myself “I’ll pick them up next time”.
To be honest, there was no next time. Just a few weeks after the unfortunate vitamin aisle experience a friend told me about a vitamin subscription company called Ritual. I immediately checked it out on my phone - it was so simple. I set up an account, selected my vitamins from a list of 8 simple choices, and purchased within 5 minutes. While the onboarding experience was fantastic, the subscription component is even better.
Now, instead of running out of vitamins and facing down the wall of choices in the grocery store, I am shipped a fresh bottle every month. I never run out and if I need to pause my subscription (like when I forgot to take them for a week) it is super easy to do on the ritual website.
Long story short, the way I shop for, and consume, vitamins has totally changed. All thanks to eCommerce subscriptions.
And, I'm not the only one. In 2020 subscription eCommerce sales took off with 41% growth, according to eMarketer. They forecast that 3.0% of US retail eCommerce sales will come from subscriptions in 2021, totally $26.67 billion and up more than $10 billion from just two years ago.
(Source)
Of course, part of that massive growth can be attributed to the Covid-19 pandemic (more on that later) but consumer’s general transition to digital first and convenience always has also help to accelerate eCommerce subscription growth.
While eCommerce subscriptions are surging in popularity today, the concept of a subscription has been around for centuries. It’s true! The earliest forms of subscriptions were those for grain, water, and other crops in the early 1600s. Soon after, the subscription business model was used in the 1660s by fire and life insurance providers in England.
Authors and publishers embraced the subscription business model when they would create personalized content for their subscribers (ex: a custom binding, or added short story).
And, eventually, all sorts of businesses were selling subscriptions from universities and charities in the 18th century to opera and theatre in the 19th century.
As the world has evolved and digitized, so have subscriptions. Primarily, more and more brands have embraced eCommerce subscriptions. One well-known example of this is Netflix. Prior to Netflix, many consumers had a membership to Blockbuster where they could browse, rent, and return movies at a local brick and mortar location.
Netflix first came on the scene as an online DVD rental service where you could browse and select all from the comfort of your home and a DVD would be delivered to your door step. Not too long after, they transformed into a streaming service, making it even easier to consume content from the couch. Netflix tapped into consumer demands for personalization and convenience, and used technology to revolutionize subscriptions.
So, what exactly is a subscription? While there are many types of subscriptions (see below), Gartner provides an all-encompassing definition of subscriptions and related terms:
There are many different types of subscriptions but four common trends I have seen in market include:
Gartner Predicts that by 2023, 75% of organizations selling direct to consumers will offer subscription services. This rapid growth wouldn’t be possible without the adoption of customers.
We see several factors that contribute to the rise of subscriptions:
Read more about Gartner’s subscription predictions here.
Historically B2B businesses have centered around personal relationships between the business and their accounts. Specifically, a sales rep usually interacts directly with a buyer. This reality has made B2B businesses laggards when it comes to adopting digital technology.
However, due the to the factors above (especially Covid-19) we have seen B2B businesses eager to launch or transform their digital channels – including via subscriptions.
In reality, there are many wonderful B2B eCommerce subscription use cases that mostly center around increased convenience for re-ordering. A few examples:
As B2B continues to embrace digital, I expect that their adoption of subscriptions will only continue to increase.
At Elastic Path, our goal is to empower all brands with the technology to bring their commerce vision to life- including eCommerce subscriptions. Our composable, API-first, microservices-based Headless Commerce solutions provide brands with the core technology to launch and optimize subscription experiences at the speed their business demands.
Want to learn how we could work together to bring your eCommerce subscriptions vision to life? Contact us today to speak to one of our commerce experts.
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