Subscription
Gist
Transaction model that offers regular access to products or services in exchange for a recurring fee.
Full definition
Subscriptions are a transaction model in ecommerce, SaaS and digital services, based on the idea that a product or service can be offered repeatedly to the same customer, who pays a regular fee (e.g. weekly, monthly, quarterly) to get and maintain access to it.
How subscriptions work
Upon subscribing, the customer (who then becomes a subscriber), selects the frequency, with which they want to receive a product or products and places a subscription order. Then, based on the delivery frequency selected, the subscription will periodically renew, automatically placing and collecting payment for the next order, which then gets delivered to the subscriber.
Subscribers can manage their subscriptions (renew, pause, cancel etc.) in the Customer Portal.
In essence, subscription-oriented businesses focus on building a close relationship between the brand and rely on current subscriber retention, rather than new customer acquisition. Ecommerce is currently leaning more and more towards subscriptions in multiple industries, like beauty, health and supplements, fashion, or pet food.
What are the main subscription types
Most popular types of subscriptions include curation, replenishment and access subscriptions. Curation subscription examples include subscription boxes, and memberships and replenishment subscriptions include various subscribe-and-save offers. Access subscriptions are still mostly digital subscriptions, but more and more often they also contain various physical products.
Another distinction, based on the frequency of billing / shipping, can be made between pay-as-you-go and prepaid subscriptions. With pay-as-you go, the customer is billed separately for each delivery, while with prepaid, they pay for a number of deliveries in advance.