What are subscription packages?
Before we explore the three main reasons why subscription packages are changing a Shopify merchant’s online strategy, we need to define what a subscription package is for those who are left out.
Before even defining a subscription package, we need to define the two words that make up this new buzz phrase.
Packages and subscriptions. let’s start there.
The beginning of packages
Long before modern trade was practiced, people all over the world bartered with each other.
Barter is a system where people exchange things they create or own for things that a willing party is willing to exchange. If the product I want costs significantly more than my product, I may offer two or more of my products for only one of the other’s products to make the deal fair.
We humans are creatures of habit. Once we find a product we enjoy using, we are unlikely to stop using that product unless there is a market disruption. Merchants take advantage of this fact through subscriptions. By offering their products at a discount to those who commit to regular purchases, both parties increase the total amount of value they receive from the transaction.
Peter The Paper Towel Buyer
A customer named Peter plans to spend $18.99 a month on paper towels. An agreement can be made between the paper towel retailer and the customer.
The written agreement will look like this:
“Peter agrees to continue buying my brand of paper towels for the next 6 months. In return, my brand will apply a $4 monthly discount to their purchase.”
Online, you might see something along the lines of:
“Subscribe and save $4/month”
Both mean the same thing and both are mutually beneficial for the customer and the retailer. The customer continues to buy the product they would have had at a discounted price anyway, and the retailer has access numbers locked in for more accurate forecasting.
In a previous blog on loyalty rewards programs, we covered their history and how they relate to subscriptions today.
How do subscription packages work?
Subscription bundles are the brainchild of two main points of ecommerce: carts and subscriptions.
The subscriber is allowed to add a number of predefined products to their package every week, month or other period chosen by the seller. These bundles are charged as a single amount, less than the total cost of the individual products that would cost on their own.
By offering bundles in e-commerce settings, you can easily increase average order values (AOV), maximizing customer satisfaction with your brand.
To learn more about what subscription packages are and how they work, check out Recharge web page on packages.
Why subscription packages change everything
You found this blog because you want to know why subscription packages are changing the face of eCommerce with Shopify. Without any further stage or background information, let’s jump in.
Reason #1: The added value of expert opinion
For most needs today, the solutions offered by online brands can vary from $10 to $1,000. Customers have reported having difficulty deciding which product is right for their use. In short, because the choice of online marketplaces they provide is overwhelming.
Most consumers are looking for “the best bang for their buck.” It often takes an expert to figure out which products meet that requirement. This expert-level service is a leading reason why consumers are willing to pay for your subscription offering.
Example: Camping Gear Outfitter
For Matthew, what started as a one-time outing with old college friends has now become a two-week tradition.
After being invited to a weekend in the woods, Matthew went down to his local big box store and bought himself a tent, sleeping bag and a few other essentials. Once at camp, he noticed that others who frequented the camp had equipment that made him look like trash. Before the trip was over, a lot of Matthew’s gear was already worn out and looked like it was ready for the trash. Matthew didn’t understand how to buy high quality gear or how to take care of it.
To combat this problem, he signed up for an outdoor brand’s subscription package program. Every month, he pays $100 to access a web page that he browses for professionally selected products he can rely on. This month, he picked up a new multi-tool, a collapsible water bottle and a sleeping bag to separate his body from the hard ground.
Some months Matthew chooses a unique, expensive item like a new sleeping bag, while other months he swaps out some gear in his camping bag to help lighten the load. Each kit comes with videos on how to properly use and care for their new gear. Matthew now feels like he’s getting a great deal from a brand he trusts with great products.
Reason #2: The benefit of consumer choice
People are fickle creatures. this is something anyone who has spent any amount of time on this planet can tell you. Asking your consumers to commit to handing over a chunk of change each month for a product they had no hand in choosing is quite the ask.
By allowing your customers to choose the product(s) they receive each month, they’ll feel secure in the knowledge that they’ve had the ultimate choice in what arrives at their front door. It’s often the case that brands offering a subscription package have a primary product for that month and other secondary choices if the customer feels that the primary option isn’t right for them. In most cases, more than 3/4 of customers choose the same basic product.
Sometimes consumers don’t want to make a complicated decision, they just want the illusion of choice. Either way, making your customers comfortable spending with your brand is always a win.
For example, your local bike shop
Mountain Bikes, a fictional bike shop in Baker, West Virginia, has heard from many customers that repair services are becoming too expensive. Not wanting to completely lose either the revenue that the repair side of their business brings in or the customers themselves, owner Mike had to innovate.
In a big change for a small local shop, Mountain Bikes now offers a $25 monthly subscription package. The products customers receive include access to appropriate video instructions on how to properly use or install the included products.
That question? Some people don’t want or need that month’s featured product. That’s why Mike allowed customers to choose consumables like tubeless tire sealant, CO2 canisters, handlebar grips…you get the idea. While a few customers go this route each month, the majority choose the product featured in the embedded video.
Now Mountain Bikes customers learn how to service, shop regularly, and feel more connected to their local bike shop than ever before.
Reason #3: Slap your spin on subscriptions
Sure, you offer your products at a discount when your customers subscribe, but why should they commit to buying from you? What added value does your brand bring that your customers can’t find anywhere else?
Every merchant needs to “put their own spin” on their subscription program to make it fun and valuable. This can be curation or content as mentioned above. It could also be a product match, a members-only community, a closed newsletter, or anything else that customers connect with and interact with.
For example, a specialized online bookstore
Located in Annapolis, Maryland, this fake bookstore specializes in reprints of books written before the turn of the century. This boutique store offers a subscription package for $50 a month that allows customers to choose two of 10 owner-selected books each period.
That question? No one has heard of these often esoteric books or authors.
The solution: Margaret, the owner, has created a members-only online community where she posts a short 1-minute summary and reviews of 10 recommended books, ending with her top two recommendations. Customers can then like, comment and share their feedback after reading. For area locals, Margaret hosts a quarterly meeting at the store for members only, with complimentary wine, appetizers and deserts.
See what he did? He has created a community of like-minded people who find value not only in the books provided, but also in the service and community that the service offers.
From software to services and now products, more and more merchants are moving to a subscription-based model. Before launching a subscription-based offering, you need to define your brand’s subscription model, whether it’s through bundles or not.
If you need help launching or optimizing your subscription program with packages, our team of eCommerce experts is here to help. Apply today using the form below to start a conversation about expanding your sales pipeline and revenue.