There is a remarkable shift occurring in the way consumers buy online. Increasingly, people are foregoing the security of owning things for the affordable flexibility of on-demand access, and upgrades to the latest and greatest products. Millennials are leading the way in this strange new world that includes rampant participation in the sharing economy, a desire for hyper-personalization, and disruption in nearly every business sector — from hospitality and transportation, to grocery and apparel, to name a few. And where millennials go, the rest of the consumer market is likely to follow.
The “end of ownership” is here. And consumer brands looking for a compelling competitive advantage for their ecommerce strategy are increasingly turning to one of the oldest business models: subscriptions.
Here are reasons why adopting a subscriptions model as part your ecommerce strategy might be the next best move for your company.
Turn your transaction into an experience
One way millennials are influencing changes in online buying behavior is through their preference for experiences over ownership. A landmark study by Eventbrite puts it plainly, “For this group [millennials], happiness isn’t as focused on possessions or career status. Living a meaningful, happy life is about creating, sharing and capturing memories earned through experience that span the spectrum of life’s opportunities.”
Contrary to what many believe, this new preference for minimalism shouldn’t be confused with austerity. Rather it should be seen as an opportunity to shift business models away from one-and-done product purchasing to an ongoing service-oriented experience.
This means reinventing what it means to sell, making a shift from monetizing products themselves to monetizing relationships and experiences. The recurring nature of subscriptions along with advances in technology have created a natural path to support this transition — one that offers multiple touch points for a brand to interact with a shopper throughout the customer journey.
Winners in the new economy will be the ones who can create and nurture happy relationships between consumers and their brands over time. After all, if a company is only monetizing their product and not the experience, for every customer gained money is being lost.
Evolve to meet customer preferences
Subscriptions offer brands the ability to not only make online connections with their customers, but to make them personal. When added to an ecommerce strategy, subscriptions open up opportunities for brands to tailor their offerings based on consumer preferences. If a shopper abandons her carts mid-purchase, for example, a company can quickly offer another pricing structure that may be more attractive. Perhaps a free trial or a lower-priced, limited-term use would reengage the customer.
Similarly, variations on time-based subscriptions also offer an ecommerce experience tailored to personal-preferences. For example, offering a monthly subscription at one price and also a lower monthly rate with an annual commitment. Some shoppers prefer to pay more for the added flexibility, while others want the least expensive option. By offering flexible pricing options and increasing the relevancy of the online shopping experience, your customers will be more likely to buy from you again.
Despite the overwhelming evidence that subscriptions are the way of the future, many companies are hesitant to embrace the model, because implementation and logistics can be complicated. But I would argue, embracing simplicity and agility is the best place to start when developing a subscription model. Start small, roll out the business model, test it, learn from it and adapt. Ecommerce allows for this type of pragmatic behavior. Our most successful clients are taking advantage of subscriptions — a model that, while it might be old, makes more sense now than ever before.
To learn more about how smart businesses are adjusting for the post-ownership era, read our white paper: The Subscriptions Generation.