In 2022, the subscription eCommerce market was valued at $96.61 billion, according to ReportLinker. As consumers increasingly embrace subscriptions, the sector is projected to be worth $2.4 trillion by 2028.
These projections come as services as diverse as streaming platforms, meal kit deliveries and fitness memberships permeate the market, turning into a social phenomenon as they create convenience and non-interrupted service.
These services are so embedded in consumer preferences that that subscriptions have increasingly cemented their place in household finances. According to a study by CR Research, households allocate approximately $219 per month toward subscriptions.
However, while these services provide convenience and value, they frequently carry a stigma of being forgotten. According to the same study, individuals are prone to forget what they’ve subscribed to, with the report indicating that 74% of consumers find it easy to overlook a monthly subscription.
Furthermore, subscriptions often retain their market value because they can sometimes be challenging to cancel.
Nonetheless, a notable trend is emerging among subscription brands: they are simplifying the process of canceling plans for customers. This shift towards transparency and a customer-centric approach reflects a broader recognition of the significance of establishing trust and nurturing long-term relationships.
Today, a dissatisfied customer can easily share their grievances on social media, review platforms or through word-of-mouth, potentially causing significant harm to a brand’s reputation. Subscription brands have recognized the potential consequences of negative publicity and are proactively taking steps to mitigate such issues. One of those ways includes making it easier to cancel subscriptions.
Additionally, in recent years, regulators have become more vigilant about protecting consumer rights in the subscription industry.
“The commission is trying to figure out how best to respond to this problem and, in doing so, is looking at all its tools,” which include law enforcement, regulation and consumer education, said James Kohm, associate director of the FTC’s enforcement division, in a 2021 interview with the Washington Post. “Clarifying the rules really does have a big effect.”
Numerous countries have introduced laws and regulations aimed at guaranteeing customers the freedom to terminate their subscriptions without unnecessary complications. Subscription companies are responding to this evolving regulatory environment by instituting more user-friendly cancellation processes.
By proactively adhering to regulations and simplifying cancellation processes, subscription brands not only avoid legal troubles but also demonstrate their commitment to ethical business practices and consumer rights.
Furthermore, subscription brands understand that retaining customers is just as important as acquiring new ones. A positive customer experience throughout the subscription journey, including the cancellation process, can significantly impact customer satisfaction and loyalty.
In the realm of retail subscription commerce, devoted subscribers are pivotal in propelling revenue and are indispensable for the prosperity and sustainability of retailers.
In “Subscription Commerce Readiness Report: The Loyalty Factor,” PYMNTS Intelligence conducted an assessment of the current landscape in retail product subscriptions. This evaluation encompassed insights from an extensive survey of nearly 2,100 consumers who maintain retail product subscriptions, coupled with an in-depth analysis of 200 subscription commerce providers spanning nine different industries.
The collaborative research, conducted by PYMNTS and sticky.io, has illuminated that the most prized subscribers, referred to as loyalists, serve as the cornerstone of the retail subscription commerce ecosystem, contributing significantly to the overall revenue stream.
These dedicated subscribers showcase unwavering loyalty to the brands they subscribe to, with an average monthly expenditure of $65 per subscription and an impressive average subscription duration of 30 months. This extended commitment translates into a projected lifetime value (LTV) exceeding $2,500.
That same research also revealed that over half of these prized subscribers, approximately 53%, belong to the upper-income category, with annual earnings exceeding $100,000. This indicates that loyalists possess the financial resources necessary to uphold their subscriptions and engage in the offerings presented by the merchants.
Furthermore, it’s worth noting that the majority of loyalists fall within the millennial or bridge millennial demographic, underscoring the inclination of younger generations to demonstrate robust loyalty in the realm of retail subscriptions.
As transparency and ease of use fuels the growth of subscriptions, buy now, pay later (BNPL) platform Affirm is reportedly dabbling in the area.
PYMNTS reported last week that the company is exploring the launch of a subscription service called Affirm Plus.
According to the report, a feature of Affirm Plus is the assurance of a 0% annual percentage rate (APR) for installment loans of up to $2,500. Presently, Affirm’s payment options encompass APRs that span from 0% to 36%.
Read more: Report: Affirm Explores Subscription Service to Diversify Revenue Sources
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