What Is the Ecommerce Subscription Model? 3 Types You Can Use

Written byLyn Wildwood

Are you considering starting an ecommerce business that’s powered by subscriptions?

Subscription billing has become a familiar pricing model for customers. They’re used to paying a monthly fee for certain services, and some even use them to have certain products reordered automatically on a regular basis.

In this post, we cover what ecommerce subscriptions are and what your options are as far as implementing them goes.

What is the ecommerce subscription model?

The subscription-based business model for ecommerce involves shipping the same product or type of product to the same customer on a monthly basis in exchange for a fee that the customer pays at a predictable interval, such as monthly or annually.

Examples of the subscription business model include services like Netflix and Dollar Shave Club.

Netflix is a streaming service that charges a monthly fee for access to its content.

Dollar Shave Club is a razor company that sends boxes of shaving razors to customers on a monthly basis in exchange for subscription fees.

It’s a different way to do ecommerce. It helps you establish a loyal customer base from which you receive predictable recurring revenue.

The pros of ecommerce subscriptions

  • Easier customer acquisition
  • Predictable monthly and annually recurring revenue through regular payments
  • Increased customer lifetime value
  • Easier to manage inventory
  • Improved customer loyalty

One of the biggest benefits of starting a subscription business is how easy it is to acquire new customers.

Certain ecommerce subscription models allow you to offer free trials or reduced price trials, both of which enable customers to try out your service before they pay for a subscription at full price.

Ecommerce subscriptions also allow you to receive recurring revenue that’s easy to predict. This will come in the form of monthly recurring revenue (MRR) and annually recurring revenue (ARR).

Subscriptions also increase customer lifetime value. In traditional ecommerce, there are no guarantees that new customers will buy from your shop again. With subscriptions, you know each custo