Subscription services provide new revenue streams

Order Management

Amazon has long touted the success of its subscription service, Amazon Prime, which grants members free two-day shipping among a slew of other attractive benefits. A new report by RBC Capital Markets, however, offers an unbiased take on the program. According to the results of the study, subscription services may be something more merchants should consider implementing.

RBC Capital Markets found the average Amazon Prime member spends $538 on Amazon.com annually – 68 percent more than the $320 non-members spend. Nearly two-thirds of Amazon Prime subscribers admitted they actually spend more on Amazon.com than they did before they were members and were also likely to have spent more than $200 at Amazon in the past 90 days.

“If Amazon’s goal is to get its users to increase their frequency and spend with Amazon.com, then Amazon Prime seems like a good program.” RBC analyst Mark Mahaney explained, as quoted by Quartz.

Why Amazon Prime has done so well

The reason Amazon’s subscription service works so well is because it entices the consumer to purchase from the retailer more often throughout the year for them to get the most out of their investment. It goes without saying that today’s eCommerce landscape is highly competitive and many merchants are struggling to find ways to gain repeat business. A subscription service can be one of the strategies retailers use to get customers to buy into their brand. If shoppers are already paying a monthly fee for a perk like free shipping, why wouldn’t they opt to buy from the retailer they already have a relationship with?

“If Amazon’s goal is to get its users to increase their frequency and spend with Amazon.com, then Amazon Prime seems like a good program.”

Subscription services have grown more popular in recent years as great value adds for savvy merchants. Other online retailers such as BirchBox have been inspired by Amazon Prime and implemented offerings such as monthly gift boxes to differentiate themselves from competitors. This creates a regular revenue stream for the retailer while also bolstering loyalty.

As online retailers turn to subscription services, they’ll need to figure out what kind of service they will provide on a consistent basis. Part of figuring this out will be determining the eCommerce operations that will be required to deliver on these services. One of the biggest benefits of buying into Amazon Prime is the free, two-day shipping offer, but if Amazon.com was unable to streamline the order fulfillment process to meet that requirement, the program wouldn’t be nearly as successful.

If merchants want to run their own subscription service, they’ll need to think about the wants of their customers, as well as their own capabilities to ensure they can successfully execute their subscription promise.

Empowering subscription services with eCommerce technology

eCommerce solutions such as order fulfillment and inventory management systems can help retailers develop their subscription services. For example, by deploying logistics and order fulfillment solutions, retailers can offer quicker turnaround speeds in terms of delivery. With an inventory management system, retailers can recognize slow-moving items and bundle them as a part of a monthly package.

eCommerce solutions such as order fulfillment and inventory management systems can help retailers develop their subscription services.

Retail is a tech-driven business nowadays, and setting up your eCommerce operations with the flexibility to support new marketing strategies such as subscription services can help retailers increase sale and reduce operating costs. 

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