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A Guide to Shopify Subscriptions

A Guide to Shopify Subscriptions

Last Updated:  
March 18, 2024

In the US, there are over 225 million active subscriptions. As the Ecommerce marketplace continues to evolve, companies are battling to find better ways to keep their customers happy. While the COVID-19 pandemic didn’t accelerate Ecommerce the way Shopify predicted it would, the convenience of purchasing from our favorite online retailers has never been easier or more ingrained in our daily lives. Forgot something and stuck at work? Take advantage of Amazon’s Prime Now. Know you go through 2 gallons of laundry detergent each month? Set up a “subscribe & save” option to replenish it without having to think about it, which saves you a little money while also freeing up the mental real estate. With businesses focusing on ways to better meet customer demands, there’s been a big trend towards creating subscription options, whether that be through subscriptions boxes, membership services, or recurring product deliveries. By giving customers a way to take the thinking and repurchasing hassle out of the equation, many businesses are successfully securing sales and additional revenue by adding subscription options. Retail Dive predicts that up to 75% of all DTC brands may offer some type of subscription product in 2023.

As part of the Shopify Editions Summer ‘23 launch of 100+ product updates, Shopify announced the addition of Shopify Subscriptions: a built-in subscription feature to easily add a subscription option to your product offering on your DTC store. You may be thinking: sweet, let’s jump in and add a subscription offer ASAP! However, there are a few things to consider before jumping on the trend, including the benefits and challenges of subscription products, the type of Shopify store that subscriptions are appropriate for, how to grow your current offerings with subscription products, and how to keep your subscribers happy to prevent churn.

The Benefits and Detriments of Subscriptions 

While subscriptions are great for a number of reasons, they can also be very challenging to maintain. In general, the benefits of subscription products include: 

  1. Predictable revenue: The stable/recurring revenue stream from subscriptions allows a company to plan their finances better.
  2. Loyalty: Subscribers tend to be loyal, which leads to higher customer lifetime value (LTV) and higher incidence of repeat purchases.
  3. Enhanced customer relationships: By providing regular interactions and consistent product deliveries, a company is able to build trust and engagement for a stronger customer relationship. 
  4. Better inventory management: With subscriptions in the fold, a company can forecast demand and optimize production and stock levels. 
  5. Data and insights: there’s valuable data available with respect to customer preferences and behavior for certain products, which can help aid marketing strategies. 

On the flip-side, some detriments of subscription products include: 

  1. Churn: keeping subscribers interested and preventing cancellation can be the biggest undertaking! When they leave, that revenue is lost. And it hurts. 
  2. Customer Acquisition Cost: Grabbing that customer initially can be costly, requiring large upfront investments in marketing/promotions.
  3. Product Fit: Not all products make good subscription options, and sustaining a subscription-based business for only certain product categories can be tough.
  4. Fulfillment and logistics: As the number of subscribers increases, managing fulfillment and maintaining timely deliveries can get increasingly complex!
  5. Customer expectations: subscribers will have higher expectations for product quality and customer support, which need to be consistently met to keep them loyal.

Is Your Shopify Store Appropriate for Subscription Products?

You can’t just add a subscription option to any product. The products that are best-suited for the subscription model are often consumables, like beauty and personal care products and health supplements. We’ll take a look at some of the best options for subscription products as well as the industries that have seen a shift towards subscriptions models. 

A consumable product is one that customers frequently repurchase or consume on a regular basis. Since there’s an ongoing need for consumables, they’re great as a subscription option because customers can ensure they have a constant supply without the hassle of having to place orders over and over again. 

Beauty and personal care products like skincare, cosmetics, grooming products like razors, and bath and body items have been successful in the DTC subscription space. Dollar Shave Club is a great example of a successful subscription-based business that launched in 2012 and continues to provide razors for people who need to keep shaving (read: everyone). The replenishment type model of a subscription-based business often has higher conversion rates than other models (65% of shoppers convert, versus 50% in the other types). The appeal of consumable products for the subscription model lies in their continuous necessity, making subscribers eager to receive regular deliveries and solidify their commitment to your brand.

Besides Beauty and Personal Care industries, some others that have seen great success with the subscription model include Health and Wellness, Meal Kits and Food Delivery, and niche curated subscription boxes, like Stationery or Books. The secret to remarkable success in these areas is building strong customer relationships to capitalize on repeat purchases. 

Finding New Products to sell on Shopify

If you’re looking to either start a brand new subscription-based business or you’re deciding which of your current products might work in a subscription model, use data to inform your decision. Evaluate what subscription-based businesses have been successful, and determine where your business will fit in the market. 

Triple Whale’s Cart Analysis Tool can help you decipher which products are frequently purchased together, which can inform the types of bundles that will be successful. The insights available regarding historical data, customer preferences, and industry trends are an invaluable resource to empower you to make the most informed decisions, which also mitigates risk. By identifying your most valuable products, you can also understand what might work for expansion of product lines. 

The diversification of product lines is a natural progression as your subscription business grows. When you introduce new and complementary products, you cater to a larger range of customer preferences. By analyzing customer feedback and leveraging data insights from your current offerings, you can identify areas where your subscribers may currently be lacking and fill that gap. For example, if your subscription-based business started with skincare products, you can move into providing accessories or grooming kits. The ideal situation will be when you’re a one-stop shop for all their beauty needs!

Another way to create excitement is to launch a brand new subscription-only product, which will bring some novelty and exclusivity to your brand. When introducing a new product, make sure it closely aligns with your target audience’s preferences (by knowing and understanding the insights mentioned above!) to ensure it lands and is well-received. Create a clever buzz with strategic marketing campaigns, pre-launch teasers, and invite your existing subscribers to be first to try it. Better yet, make it exclusive to them to foster loyalty. 

Leaning into the exclusive angle, you could also create a new product that is only available as part of a subscription box. This can elevate the subscription experience by offering subscribers items they can’t find elsewhere. Consider partnering with a well-known brand, influencer, or artisan to create a limited-edition product or product box to generate demand. 

Growing Your Subscription Program

As a Triple Whale customer, Obvi was able to grow their revenue by 67% by utilizing the detailed metrics the platform offers. Prior to Triple Whale, Obvi was spending a lot more money than necessary to acquire customers, since they found their ads were capturing 50% of returning customers. By adjusting the targeting, content, and offers they were presenting, they were able to shift the balance to acquiring new customers by honing in on N-CAC (New Customer Acquisition Cost). By adding more customers to the subscription base, Obvi was able to ensure it had the revenue coming in to support the business. 

Of course, another key focus is keeping your subscribers happy to prevent the ultimate fear of subscription-based businesses: churn. If you’re getting a lot of new customers, that’s great! But if you’re losing just as many, that’s not great. 

Focusing on what your customer wants out of your brand is the most important step in keeping them around. For example, make sure you’re creating opportunities for customers to provide feedback, and then actually act on their suggestions. By continually evaluating the data available and iterating and improving on it, you’ll have happier customers that will promote your brand. 

Obvi has a unique community of users on Facebook that regularly communicate, share recipes, ask each other questions, and get consistent engagement from the company themselves. If it was a deal that brought the customer into the Obvi family, it might just be the community that keeps them from churning. 

One of the leading subscription platforms around is Recharge, with over 50 million subscribers around the world. Recharge has the subscription platform available to create on-brand personalized customer experiences that can turn one-time buyers into repeat customers. As mentioned extensively in this blog, it’s imperative to keep a close eye on the data. Triple Whale’s integration with Recharge allows you to see your subscription metrics like new subscriptions, total subscription recurring orders, active subscriptions, and churn numbers to get the full view of your subscription customer’s journey on the Triple Whale dashboard. 

To conclude, as the Ecommerce landscape continues to evolve, subscription-based businesses have emerged as a powerful strategy to meet customer demands and secure consistent revenue streams. With Shopify’s new Shopify Subscriptions functionality, it’s easy for an existing business to add a subscription-based product or for a brand new business to dip their toes into this high-revenue opportunity. While subscription-based businesses can be lucrative and have many benefits, it’s important to understand the detriments before fully jumping in. Finally, using the sales data that exists on your Shopify store, with the equivalent of a full data team on your side in using Triple Whale, you can maximize your profits by creating subscription options around your bestsellers or most appropriate consumable products. By catering to consumer preferences and leveraging those data-driven insights, you can keep your subscribers engaged and satisfied as you continue to build and grow your DTC business. 

© Triple Whale Inc.
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