Subscription Commerce Deals With Success

It’s not their fault. They just happened to be the right thing at the right time.

“They” are subscription commerce providers of every variety. As a direct result of pandemic lockdowns, companies that deliver cool experiences to your house in clever ways are doing well.

PYMNTS’ July 2020 Subscription Commerce Tracker®, done in collaboration with Recurly, looks at the success of subscriptions – and the hidden issues associated with them – as the COVID summer kicks in.

“COVID-19 has [redirected] the trajectory of subscriptions into the future, because the notions of convenience, safety and access that were appealing to subscribers before have only been accelerated now that they are reconsidering the true cost of going to the store or the mall, browsing aisles and racks, finding something they like and then bringing it home,” Dan Burkhart, CEO and co-founder of Recurly, told PYMNTS.

“Offering consumers a variety of procurement and payment options — from longer free trials and [the ability to] pause existing subscriptions to delivery and contactless payments — are just a few of the tactics that merchants are using to not only survive the economic impact of the pandemic, but to thrive in spite of it,” Burkhart said.

Business Is Good

From Amazon Prime to Netflix to Drizzly – and even way beyond those champions of recurring revenue – subscriptions were the perfect pastime for tens of millions of homebound people hiding out from COVID during the interminable second quarter of 2020.

Success breeds competition, and competition is good – as long as providers are up to it.

“PYMNTS’ research has shown that as the market has grown more crowded and competitive, leading subscription providers have made consistent progress in improving key aspects of their digital operations to help aid retention, affecting their onboarding, conversion strategies and plan flexibility,” according to the latest Subscription Commerce Tracker®.

“Providers notched their highest scores ever in Q2 2020, earning an average 65.1 points out of 100, according to the latest Subscription Commerce Conversion Index, a collaboration with Recurly. The importance of strong digital platforms will grow in the months and years ahead due to competitive pressures and potential economic headwinds.”

“Overwhelmed” By Subscriptions

Action in the subscription space heated up like summer asphalt when, in the latest salvo between the retail archrivals, Walmart+ was launched to take on Amazon Prime. Walmart’s imprimatur on subscriptions may be the tipping point, but it’s hard to know exactly which way things are tipping as beaches beckon and delayed Q2 bills start adding up.

“The varying fortunes of subscription enterprises demonstrate that doing the subscription model right requires investment, strategy, robust digital capabilities and flexible plan offerings,” per the July Tracker. “One familiar challenge providers have had to grapple with is subscription fatigue, or consumers’ sense that they are juggling too many accounts. The pandemic may in fact intensify these feelings for younger and budget-conscious consumers. Millennials hold an average of 17 subscriptions, according to one survey, and 40 percent of them feel ‘overwhelmed’ by having to manage all of them.”

Given that backdrop, at this moment, what’s the must-have feature? The ability to pause.

“This allows users to place their accounts on hold while preserving their settings and preferences, and it enables providers to maintain connections with their customer base,” the report stated.