Subscriptions Go Mainstream and Get Creative

Subscriptions offer benefits to both merchants and consumers alike, writes Christopher Chiou, chief financial officer at sticky.io, in the PYMNTS eBook “Endemic Economics: 32 Payments Execs on the ‘Next Normal’ That Never Happened.” But consumers want more. To stand out in the crowded subscription space, brands need to offer control of consumption, flexibility and ease of use.

The COVID-19 pandemic accelerated a shift in consumer purchasing behavior with the proliferation of subscription commerce and the widespread consumer adoption of direct-to-consumer subscriptions. Subscriptions offer benefits to both merchants and consumers alike. Merchants have a more linear and predictable and revenue stream with recurring revenue and the increase in customer lifetime value associated with subscriptions balances sharply rising acquisition costs. Consumers enjoy the convenience and cost savings of “subscribe and save.”

Consumers, however, want more. In addition to convenience and savings, consumers want control of consumption, flexibility and ease of use with the technology they use to manage their subscriptions. The brands and merchants that embrace these demands will be the winners in subscription commerce moving forward. Some of the most innovative brands have already moved well beyond the subscribe-and-save model that was designed for simple replenishment and curated boxes which have been the mainstays of subscription commerce for more than a decade.

Harry’s is a great example of a brand that has given consumers complete control of consumption. Two weeks before shipment, Harry’s reminds its subscribers of the upcoming delivery and provides the opportunity to add a variety of items for single purchase as well as subscriptions. Often on offer are a variety of travel-size items and mystery products as well as introductory offers for new products. Subscribers also have the ability to pause, skip a shipment or alter the contents of the subscription at any time. Harry’s has created the perfect combination of consumption control and experimentation opportunities.

Another innovation that we’re seeing is the build-a-box model. Fish Fixe, a sticky.io client that was recently featured on Shark Tank, not only offers subscription boxes curated by their fishmongers but also allows subscribers to build their own box of seafood from a wide variety of choices. Subscribers can also swap out and alternate the contents of each shipment based on available seafood choices. The build-a-box model is another great example of providing the consumer with control and flexibility and is especially well suited for the food and beverage category where consumers want variety.

UrbanStems, a sticky.io client and online florist, specializes in exotic bouquets and plants delivered nationwide overnight. As they began to offer a variety of subscriptions, they needed the flexibility to offer a seasonal product that would rotate across the seasons — a slight variation of the curated-box model. As momentum is built with their subscription offers, they also make subscriptions giftable with the ability for the recipient to take over the subscription and continue beyond the gifted period.

The last two years have been a period of rapid growth for subscription commerce. The most recent edition of the Subscription Commerce Conversion Index, a PYMNTS and sticky.io collaboration, estimates that the U.S. retail subscription market is now worth $15.1 billion monthly, a 67% increase since July 2021. The creative innovations that we see from our clients at sticky.io are evolving at a rapid pace, and I believe that subscription models will continue to evolve to meet consumer demands for flexibility and control.