All You Need To Know About Replenishment Subscription Before Getting Started

May 11, 2021
Emmanuel Cohen

What is a replenishment subscription and why would you want to know it?

Replenishment subscriptions, alternatively called "subscribe and save", constitute 32% of the e-commerce subscription ecosystem. Its popularity has quickly grown to make it the second most widely adopted subscription model by businesses across various niches. But that’s not all.

With every passing day, more consumers are depending on subscription businesses to fulfill key aspects of their daily lives; to save them time, offer convenience and help save money while delivering their frequent needs. And this is why the subscription industry is growing at an unimaginable rate. Between 2019 and 2020, subscribers grew by 90% and the numbers have been on the rise since.

What’s more surprising is that these new customers are also spending more. Across all verticals, we found that the average order value (AOV) for subscription box businesses rose an average of 6%.

Before you decide what subscription model is right for your business, I recommend that you read all three articles I'm writing about the three most popular e-commerce subscription models. We have discussed the benefits and approach to doing access subscriptions the right way in the last article and will talk more about curated subscriptions at a later time. But let's get to the replenishment subscription before you make a decision.

What is a Replenishment Subscription?

Replenishment subscriptions enable consumers to automate the purchase of necessities such as pet supplies (snacks, toys, etc.), baby supplies (nappies, food), and groceries. Replenishment subscription services usually involve commodity products or things that are utilized on a regular basis. Subscriptions for coffee beans, cleaning supplies, razors, and diapers are popular, but the product selections are practically endless.

Some brands offering replenishment subscriptions sometimes provide subscription options for several of their starter kits at a 10% or 20% discount, just as a strategy to get them to subscribe.

Many replenishment subscription-based businesses are attractive not only because of their low prices but also because of the convenience they offer. Since replenishment subscription commodities are frequently used consumables, customers see replenishment subscriptions as a way to offload one of their regular shopping tasks. It offers them the opportunity to "set and forget" the task, which eliminates the need to add it to their to-do list and helps them avoid the need to go out and buy their things in a physical store.

However, the perks of a replenishment subscription don’t end with customers. It extends to businesses, and they find it appealing for several reasons.

Advantages of Replenishment Subscription

Whether you're just getting started or thinking of adding a subscription to your existing products, the replenishment subscription model can benefit your business in a variety of ways that are not limited to:

  1. Higher Customer Engagement and Satisfaction

Subscriptions create natural touchpoints between brands and their customers. Whether it's via email about exciting new products, product recommendation quizzes, discounts, perks, or upcoming order alerts, when you communicate with your subscribers over a longer period of time with a recurring product, you have the opportunity to learn more about them and their preferences. That way, you get to understand your consumer's needs enough to restructure them, thereby increasing customer satisfaction.

  1. Higher Average Order Value

Subscription businesses have the opportunity to increase their average order value by simply cross-selling and upselling. And that could mean offering discounts when customers opt to increase their orders or using product recommendations in addition to your regular subscription.

  1. Improved Customer Loyalty

Subscription brands of all kinds are particularly positioned for strong consumer loyalty due to their recurring, relationship-based nature. Replenishment subscriptions, on the other hand, have a distinct advantage because they often offer commodity items. Consumers desire simplicity and ease when it comes to getting their important everyday necessities, and they often prefer to remain with a brand they know and love rather than hopping about. When made flexible, replenishment subscriptions provide that opportunity to build a loyal consumer base.

  1. Improved Customer Lifetime Value

Subscription services allow you to build long-term relationships with your clients rather than just one-time transactions. This means that if your subscriptions are flexible and handy, customers will spend more with you throughout their lifetime. 

Other Considerations

While replenishment subscriptions have a lot of benefits for both merchants and customers, it's also crucial to consider the risks. Before launching your replenishment subscriptions or scaling one, think about the following to ensure your brand's success:

1. Product Fatigue

You may be vulnerable to product fatigue depending on your industry, but this is more likely with some product types than others. Let's imagine you run a protein bar that sells its products on a subscription basis. With every passing day, your customers may grow bored of your choice of flavor.

To avoid this, conduct research and provide not only the product varieties that your customers desire but also the quantity and variety that mark the correct balance for your consumers.

Think of it this way:

If your product varieties are too few, customers may become dissatisfied with your products and choose a competitor.

And if your options are too many, subscribers may become overburdened with the paradox of choice, and inventory management for your company may become more difficult.

To address this challenge, you should consider A/B testing to find the optimum product mix for your company and your customers. You may also consider offering a product matching quiz to assist your consumers in finding the best product match for them.

2. Customer retention and acquisition costs

It's just as crucial to consider your customer acquisition costs as it is to consider your retention methods. This is because retaining existing customers is significantly less expensive for businesses than acquiring new ones.

Data and analytics can help businesses keep track of customers' activities as they allow businesses to have a better understanding of their consumers, their activities, and their preferences. And this enables businesses to fine-tune their retention and customer acquisition strategies.

And you should always analyze your lifetime value in relation to the customer acquisition cost rather than focusing solely on your LTV.

Positioning Your Replenishment Subscription for Success

When considering how to improve your replenishment subscriptions, it's crucial to remember why customers are driven to these services in the first place: value and convenience. Here are a few ways to improve your offerings while keeping your bottom line in mind:

  1. Create a Customer Loyalty Program

Loyalty programs are a great way to keep your current subscribers while also giving them something extra. These programs come in a range of forms. For instance, after your customers have subscribed for a specific period of time, you might consider giving them a gift or a discount voucher. You might also explore the option of providing early access to new products to your most devoted customers, which will serve as additional value to them while also giving you the opportunity to test the viability of a new product. 

If you decide to offer these perks, make sure your message is as straightforward as possible so that your customers can clearly understand how to benefit from them.

  1. Strengthen your Omnichannel Experience

One of the most appealing aspects of replenishment subscriptions for consumers is convenience. As a result, it's essential that you strengthen your omnichannel experience. This ensures that your consumers get the same high-quality experience whether they purchase in a physical store or online, and regardless of the device or platform they use.

Allow your subscribers to manage their subscriptions by SMS if possible. While that may seem farfetched for many subscription management apps, it's a walk in the park for apps like Chargezen. You should also ensure that customers can simply access your business using a mobile device or a social networking app, so they can enjoy a seamless shopping experience.

  1. Create a Flexible Subscription

Making your subscriptions as flexible as possible is one of the most crucial things you can do to keep your subscribers. Make it simple for your consumers to do things like:

  • swap one product for another

  • add one-time purchases to their subscriptions

  • change their shipping address

  • skip or postpone a delivery

  • Cancel subscription

  • Reactivate subscription

These ideas can also be very effective churn-reduction strategies for all subscription models.

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