As brands have begun to evolve due to COVID-19, subscription offerings have been impacted tremendously. Many founders are baffled about what to do. But, you’re not alone. Learn about the trends we’re seeing with Shopify Subscription businesses and what successful brands are doing as they explore these new waters.
Read on to learn what’s happening in the subscription service realm and how you can better navigate through the muck to a thriving company in a post-Coronavirus economy.
eCommerce Subscription Trends From the Last 12 Weeks
What happened in the eCommerce space due to COVID-19? In our helpdesk ticket platform, we’ve seen the following trends in subscription business customer service:
- In the beginning, there was a tremendous spike in subscription cancellations.
- Shortly thereafter, we saw an increase in requests for a partial refund.
- A few weeks passed before we noticed an influx of solicitations for full refunds.
- Most recently, order cancellations came pouring in.
Now, partial refund requests are going down -- these requests were for shipping costs, specific discounts, and other related transactions.
On the macro level, overall subscription order processing is up. However, on the micro level, a number of merchants aren’t weathering the storm as well as others.
Subscription offerings in the higher-value, hobby space seem to be a bit slower than usual. Yet, merchants who offer subscriptions for essential consumer packaged goods have to hustle to keep up with demands.
And, this is not surprising at all. Many people had a knee-jerk reaction to the pandemic while others had a change in priorities. Right now, people are more reserved about making snap-decisions. We can likely expect purchasers and merchants to make more calculated decisions now and into the future.
Now that we’re working from home, we need new essentials like office supplies and furniture. Plus, for some of the essentials like health and beauty products, we’re now turning online for where we might have gone to a brick and mortar shop before.
Now, people can’t really hop into the store to pick up tp and other essentials on the way home anymore. So, consumers are looking to find the most convenient way to have them delivered. And, they want to know they have a reliable source of essential products.
For example, at the beginning of this pandemic, everyone knows there was a tremendous run for toilet paper. And, merchants who offered this product saw 10-15X increases with toilet tissue sales.
Who Gives a Crap is an Australia-based, charitable toilet paper subscription company.
When this crisis started, Who Gives a Crap held back stock to accommodate subscribers rather than allowing new customers to order. They chose to prioritize loyalty over acquisition.
This brand is now thriving because of a steady uptick in consumable goods online. And, while the 10-15X trend may not last, long-term retention and increased revenue are likely. People will want to subscribe to receive preferential treatment.
Are Higher-Ticket, Hobby Subscription Services Suffering Higher Cancellations & Refunds?
We don’t have the exact numbers, but just because you offer higher-ticket hobby products doesn’t mean you’re doomed. There are multiple causes for high order cancellations and refunds.
For example, the supply chain is a key issue. If you don’t have inventory because you’re non-essential or shipping is too slow, you may have to cancel orders and offer full refunds. This happens because you don’t have the ability to fulfill an order, not because of an economic downturn.
Consumers are also leveraging the freedom to skip shipments and utilize subscription flexibility in other ways. Some people have overstocked or stockpiled on certain products. Then, they realized they didn’t need the quantity, so they now want to pause while still maintaining a relationship with a subscription company.
The UK Independent noticed a trend with sex toys, which fall into the non-essential category -- sales have tripled across the board. While it may have been predictable in retrospect, this isn’t a typical trend for an economic crisis. But, with social distancing, people can’t really go in Tinder dates and they have a lot of time on their hands. So, consumers are spending more money on at-home entertainment.
(Yet, if your supply chain runs out, no matter your niche, you may still see an increase in order cancellations.)
What are the Products With the Highest Interest for Online Shoppers Right Now?
Supermarkets aren’t able to service people at their homes in many cases. So, consumers are turning online for many of their daily needs and wants. What we’ve seen is an increase in subscriptions for nearly anything that you use at home. Specifically, here are the products we’ve noticed are in high-demand.
- Coffee & Tea
- Pets (Cat Litter, Pet Food)
- Toilet Paper
- Cosmetic & Well-Being (Natural Deodorant)
Underwaterpistol, a leading Shopify Plus service provider, is working with a new client who was planning to launch a natural cosmetic and well-being subscription box prior to the pandemic. While Coronavirus has added some red tape to the logistics of the operations, consumer demand has accelerated rollout for these products.
Keep in mind that, over the next few weeks, we are sure to see more changes and it will be important to watch them.
What Do Successful Subscription Brands Do Differently?
Some of the tactics we see successful brands using are the same across the board. Know what they are so that you can thrive in the subscription business world.
1. Retain Subscribers with Preferential Treatment
Preferential treatment is one of the most effective business tactics for subscription companies because it aligns with the core of why people subscribe in the first place: exclusivity. Who Gives a Crap “guaranteed” subscribers would get their products, which motivated people to subscribe.
Pre COVID-19, we did this at Gorgias and we can attest to the power behind the process. Our subscribers were grandfathered-into specific prices and features. And, we experienced high retention because of this. You will have similar results with consumer packaged goods subscriptions.
2. Leverage a Wider Product Range
Most subscription box companies have core consumable items. They sell between one to three variations of a product. But, many of the successful brands we see leverage add-ons, either relevant to the core offering or not.
A one-time product add-on is trending right now, especially on longer-time use items. So, if your core offering is toilet tissue, which people go through quicker, and you add another product to your offering that might take longer to use, like toothpaste, it can help you increase one-time sales. This is a smart move even if it feels negative that someone wants to cancel their subscription the next month.
3. Adapt their Subscription Models to Change
If you can no longer offer your supplies because of a supply chain issue, you have choices:
- Sit and wait for this to end while you lose money and loyalty.
- Make a short-term investment to resolve the problem for long-term results.
For example, some sellers can no longer use Amazon’s warehouses for fulfillment (which aren’t only for sales on amazon.com) because the company is only accepting essential items, at least temporarily. So, some of those sellers stop offering their products through FBA. Those merchants lose a ton of business.
On the other hand, there have been sellers in similar positions who flew out to their suppliers and negotiated dropshipping solutions. And, guess what? These brands’ sales haven’t skipped a beat.
4. Add Fringe Benefits
Amazon Prime members get expedited shipment on purchases and discounts. Likewise, subscription companies can offer fringe benefits and free gifts to their subscribers.
Freshly Picked is an infant moccasin company that implements this strategy well.
Freshly Picked offers “The Fringe,” a membership that costs $10 month. Fringe members get expedited delivery, discounts, and the $10 is redeemable in the store. So, customers can apply their membership cost to purchases. Using this method, you create a perceived discount without giving up your margins.
5. Use Shopper Objections to Fuel Membership Benefits
You have your customers who believe in you. Then, you have your non-believers who have objections about why they don’t order or why they don’t upgrade. When you know what causes people not to convert, you can make better business decisions.
So, find out what makes people NOT order from you. Then, add value to your membership offer by providing those perks exclusively. Look to your customer service requests to discover what some of your audience’s greatest problems are, then solve them.
6. Implement the Right Tools
First of all, it’s super important to make sure the tools you use are compatible with one another. Next, you need to use reliable platforms. Third, make sure you leverage the features that are available to you.
The following tools work well alone, together, and with Gorgias to power subscription businesses.
A constant, consistent message is key. And, Klaviyo can help you deliver this by automating crucial analytics, email flows, and sequences.
Advanced Tip: It can work wonders to push for a new subscription after a customers’ second order.
Recharge is a must for anyone who wants to process recurring payments at scale in today’s market.
You need to be tracking and monitoring visitor and user behavior. Leverage Little Data for advanced and relevant analytics.
Reduce customer churn with failed payment recovery options from ChurnBuster.
Create data-driven loyalty programs to generate more engagement and subscriber retention.
7. Communicate Beyond Email
Email isn’t dead, but you now have an unprecedented opportunity to get in front of people where they are -- on social media and on their phones. Worldwide since the start of Coronavirus 45% of consumers are spending more time on messaging apps like WhatsApp and Facebook Messenger. And, brands are paying attention.
As a subscription service offering, you should use social media and SMS for order updates, upsells, and other customer communications. Don’t limit yourself to email. And, choose tools that enable you to meet your customers where they are.
8. Deliver a Consistent Brand Message
As always, your brand message is central to your success. Right now more than ever, people want to hear from you. And, if you stay consistent and connected, your customers will stick with you now and into the future.
Be mindful that each detail is aligned across all communication platforms including your website, social media, email, and offline messaging. You have an unprecedented opportunity to be remembered if your messaging strategy is aligned across all channels.
9. Incentivize Wisely
Brands that know how to incentivize see higher returns in business. To illustrate, many new subscription companies launch aggressively with 20% discounts for new users. And, while they believe they’re offering more incentive for customers or members to purchase, they’re actually only making a cut to their own profits. 10-15% discounts offer the same psychological incentive at less cost to the merchant.
One incentive that does work well is to offer a small discount for the new subscriber and the same discount for a friend. This works well because it creates a sense of community and giving for the customer and generates a referral for the business.
The bottom line is that successful companies seem to inform themselves about incentives that work and apply creative strategies that show proven results.
The online shopping ecosystem is evolving, but that doesn’t mean it’s all doom and gloom. There are actionable steps you can take to stay in the game now and into the future. Stay informed and roll with the punches. Remember that a bit of extra effort now can have a lasting impact on the long-term outcomes of your business.