Subscription services have quickly become a massive part of our lives. While subscription based businesses have been around for a long time, and were never solely digital, consumers are likely to identify subscriptions with the likes of Netflix and Spotify.
Merchants are taking a hybrid approach and combining the efficiency of eCommerce with physical subscriptions to increase customer lifetime value. Offering a “subscribe and save” option turns a single-purchase customer into a monthly or weekly recurring customer.
While the subscription based business model has been adopted rapidly in recent years and become a growing trend within the eCommerce industry, there’s previously been little data for businesses to benchmark against. Finally, ReCharge has compiled data from over 4,000 merchants and 12 different verticals, providing data that allows merchants in the physical subscription space to benchmark their business for the first time against real data. This is monumental for our team of data-driven Shopify Experts. The data uncovered by ReCharge validates what we’ve been telling our clients for years – that ongoing recurring options lead to positive growth.
The data shows more than 57% of customers are choosing monthly subscriptions. Customisation is simultaneously gaining traction as customers realise they prefer to tailor their subscriptions. More than a third of customers, 35%, are more likely to choose a custom plan length that falls outside of the typical monthly, quarterly, annual, or semi-annual.
Monthly is by far the preference, with over half of all customers on both Subscribe & Save and Box plans choosing the monthly plan.
Although this preference is then broken down by vertical, with customers in some categories favouring custom subscription options.
Categories such as pets and coffee predominantly favour custom subscriptions, while health & Wellness and Beauty favour monthly subscriptions. Despite being non-essentials, these categories have devoted customers.
Average Order Value (AOV) is a key health metric for every subscription business, helping businesses determine acceptable customer-acquisition costs, lifetime value, and more.
Subscribe & Save plans feature essential categories such as Beverage, Food, Supplements and Pets while Box plans feature more luxury beverage items (like Craft Beer or Dry Farm Wines), entertainment, Food and Hobbies. The data suggests customers don’t mind spending a little more for specialty, hand-selected items but would rather Subscribe & Save on those day-to-day products they regularly purchase.
Beverage and Food verticals have the highest LTV. While Beverage as a vertical performed well across all metrics, it is more valuable under a Box plan, such as a curated wine subscription. This verifies that there are long-term advantages to curate picks, even in categories that at first glance seem commodified.
Membership models boast high AOV, high LTV, and are fully customisable to fit customer needs.
As Shopify Experts, we’ve continued to see the success of merchants adopting membership and subscription models. Need to strategically adopt a subscription or membership model for your business? Chat to one of our eCommerce specialists.