How to Use a Subscription Model to Sell Physical Goods

Why Use A Subscription Model?

Businesses whose customers buy the same product regularly are the first who should consider a subscription model. If your customer is going to come back again and again for the same order, might as well invite them to sign up for periodic delivery/shipment, right? We’ll see further on that subscription invites after one-time purchases are actually a commonly used entry-model for the category.

How To Use a Subscription Model for Physical Goods

Using a subscription model for physical goods needs to be implemented carefully, and this model will not be suitable for all brands that sell physical goods.

Popular Subscription Models for Physical Goods

If you decide that a subscription model is suitable for your business, you will first need to decide which type of subscription model you will use. For physical goods, here are the most popular of these models:

  1. Subscription boxes — users sign up to receive a weekly or monthly box of products from a category that they use recurrently, for example beauty products, personal care products, pet food, and so on. Subscribers usually either choose certain products to receive periodically or they can also opt for mystery boxes, where the seller surprises them each month with a mix of products from a category.
  2. Buy and subscribe — this is another similar model where users are invited to subscribe to recurring deliveries after ordering a product from categories used on a regular basis. Diapers and even water are examples of categories this model has been employed for.
  3. Open/closed memberships — both models imply an exclusive membership and they are beginning to gain traction in physical good categories. In closed memberships, only subscribers have access to categories of products, like the Danish manufacturer WineFamily whose audience is made up of its subscribers. In open membership models, a subscription allows access to extra benefits — in fashion, for example, getting an annual VIP subscription with a clothing store could give access to exclusive discounts, not available to shoppers who haven’t subscribed. Amazon Prime is another example of membership subscription, which gives subscribers access to premium features, such as express delivery, not available for regular platform users.

Subscription Marketing for Physical Goods: The Challenges

All this said, there are some challenges to implementing subscription models for physical goods. Most of these stem from the benefits that customers perceive in subscription models — where these expectations are not being met customers will quickly cancel their subscription.

Choose a reliable subscription platform

In order to successfully implement a subscription model for physical goods, you will need to invest in a reliable, fully-featured payment and management platform. There are plenty of options available, but the best platforms will offer the following features:

  • Low transaction fees
  • Easy subscription management
  • Customer self-service for subscription management
  • A high degree of customization for subscriptions
  • Multiple subscription plans
  • Built-in customer support functionality
  • Integration with your existing website
  • Multiple payment gateways
  • Automatic re-billing after failed payments

The Bottom Line

In short, subscription models come with both opportunities and challenges. If implemented well, they can increase revenue, customer retention, and bind your customers together into a powerful brand community. If rolled out incorrectly, you run the risk of alienating customers or even turning them against your brand altogether.

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2Checkout (now Verifone)

2Checkout (now Verifone)

2Checkout (now Verifone) is the leading all-in-one monetization platform for global businesses built to help clients drive sales growth across channels.