Subscription Ecommerce Payment: 7 Key Considerations

subscription box gift feature

Subscription ecommerce has become the rage. But is the rush to buy online just a temporary side effect of the pandemic, when people had to stay home to stay safe and wanted everything delivered to their doorsteps? Not according to industry analysts. Research indicates that 75% of direct-to-consumer (DTC) brands will offer subscriptions by 2023.

With subscription ecommerce, DTC brands have the alluring opportunity to generate recurring revenue. However, just deciding to turn customers into members and offer them products on a regular basis is no guarantee of success. Subscription ecommerce is complicated, and brands that jump in unaware may find themselves taken aback by a long list of challenges: Payment security and alterations, custom orders and varying membership levels, the timing of deliveries, incorporating rewards and loyalty programs, and even wrapping and packaging.

Payment Looms Large

At the top of the list of hurdles for subscription ecommerce is payment. From convincing customers to divulge card info to choosing a payment gateway and ensuring tax compliance here and globally, the payment process can be daunting.

Despite these challenges, building a successful subscription ecommerce business is worth the effort. According to UnivDatos Market Insights, the global subscription ecommerce market is expected to reach $478 billion by 2025, in part because it allows for revenue diversification, enhanced customer relationships greater customer LTV.

7 things to Consider for a Subscribed Future

To succeed, it’s vital to tackle some of the most important questions and choices upfront. Here are seven of the most crucial.

Acquisition: How can you capture new customers and convince existing customers to sign up for an ongoing subscription?

The basic tenets of subscription ecommerce are convenience, personalization and exceptional service. You may want to offer customers a deal they can’t refuse, add personalized touches to attract new subscribers, or offer exclusive or early access to new products.

Retention: How do you keep engaged with your subscription offering? 

Once consumers have subscribed, self-service provides them with a wide variety of choices. This includes the ability to alter preferences, pause or skip shipments and switch between subscription and ȧ la carte offerings—all of which encourage long-term customer loyalty.

Consider flexible add-ons and product bundles to upsell smarter. For instance, test which bundling strategy works best to increase AOV. Also, analyze cancellation trends weekly to identify patterns. With these insights, you can implement strategies that help prevent churn and create product stickiness.

Customer experience: How can you build a delightful end-to-end customer experience that engages and builds customer loyalty? 

Exceptional customer relationships have always been the best currency in business, and that’s even more true in the subscription economy. Once customers opt in, connect with them on a personal level and make resources and goods available on demand. Reassure them that they can cancel at any time and stand by that promise.

To provide the best end-to-end subscription commerce experience, offer timely, personalized offers based on preferences, past purchases and any intent data. To deliver a personalized customer experience and marketing, teams from finance to marketing should be empowered by technology. The right technology not only enables tailored customer experiences but helps you avoid hiccups. No customer wants to be put on hold while a billing issue is resolved, for instance, so automating internal workflows at scale is now more important than ever.

Payment Options: How do you decide on the best payment gateways and vendors? 

To keep focused and maintain growth without having to expend resources, look for vendors that can automate complex subscription billing processes. Make sure it allows for optimal levels of experimentation and scalability and isn’t time-consuming to maintain.

Pricing: How do you optimize your subscription pricing and packaging?

Considering the dynamic changes in consumer behavior, you need to be able to adapt quickly and continuously, making proactive changes to you value proposition, pricing and packaging.

An ecommerce subscription model allows you to offer consumers various pricing and packaging options including monthly and annual memberships, curated and set boxes, discounts and more. You can run multivariate A/B tests to learn what works best for each customer segment.

With a flexible product catalog, you can constantly roll out new price points and discounts, A/B test and learn what combination of pricing, promotions and plan lengths creates the highest customer LTV.

Inventory: How will you deal with demand volatility and ensure you have enough supply?

Ecommerce businesses need to be able to estimate consumer demand and respond to its ups and downs. Subscription ecommerce, provides a level of predictability to smooth out peaks and valleys in demand.

Geographic expansion and compliance: How do you ensure your interstate and international sales are tax compliant?

Every time you want to add more product categories or expand into new geographies, you need to tack on extra code to stay sales tax compliant. As you expand globally, this can be an obstacle to rapid growth and flexibility while increasing tax risks. The right technology solution helps you focus on revenue growth and customers instead of the complications of sales tax compliance.

A final word

For many DTC brands, the future is subscribed. With a thoughtful strategy and the right partners, you can turn subscription ecommerce from a sideshow to center stage, providing long-term benefits in terms of customer loyalty, revenue diversity and sustainability.

Krish Subramanian Is Co-Founder and CEO of Chargebee