The State of Ecommerce Subscription in 2020 and the Way Forward

May 11, 2021
Emmanuel Umukoro

According to research issued in 2019 by the Subscription Trade Association (SUBTA), the eCommerce subscription market grew 17.33% annually in the past few years. By 2023, it is expected that three-quarters of brands that sell directly to customers will offer subscriptions, with worldwide eCommerce subscriptions accounting for 18% of the overall market share.

"Consumers find subscription services appealing for several reasons," says Christopher George, Co-Founder of SUBTA. “It allows the consumer to engage in a relationship with the brands,” he says, "and in many cases, subscriptions also save the consumer money and bring value at a lower cost per month when compared to a one-time large payment.”

According to a McKinsey report, several big businesses have gotten in on the action, spurred on by the success of startups like Dollar Shave Club, Hello Fresh, and others. Several household brands like Amazon have also increased their subscription offerings or launched subscriptions altogether. Ken Fenyo and Adam Mitchell of McKinsey expect these established players' initiatives to boost sales and expand consumer awareness of the concept, and we've been seeing it play out ever since.

The U.S. is currently the leader when it comes to subscriptions, with 69% of consumers having multiple subscriptions and 28% having at least four ongoing subscriptions. However, subscription is not an American thing as one-half of Canadians and Germans have multiple subscriptions with the U.K and Austria next to them.

How COVID-19 Aided the Growth of the Subscription Business Model

According to Jerry Abrahamson, founder of Chargezen subscription management platform, the majority of subscription-based businesses did well throughout the coronavirus outbreak. Over 53% of subscription-based businesses confirmed that subscriber acquisition rates were not affected. Although less than 13% saw subscription growth slow down, they were still onboarding new customers, while about 22.6% witnessed an increase in subscriber rate.

Some subscription facilitators confirmed increasing numbers of subscribers in March 2020, with total subscriptions up by over 39% weekly across all customers. A particularly substantial increase was seen in the health and wellness, pet, and specialty retailer sectors.

“During these uncertain times, relationship commerce gives consumers a convenient and safe way to shop,” says Jerry. He ascribed the increased reliance on subscriptions to the relationships these profitable brands built with customers.

While most brands have seen increased subscriber numbers, growth has been shaky. According to Jerry, subscriber growth fell from 20% to 30% at the beginning of March 2020. The figure recovered later, and daily average subscriber growth became 20% greater than in the first quarter, with retention rates remaining unaffected.

Is subscribing right for your brand?

With many physical stores still shuttered, doubling down on eCommerce in the form of a subscription service could significantly boost revenues for DTC brands.

For most of Chargezen's customers, adopting a subscription was not a question of "if" but "how." With lockdown having no end date, brands had to evaluate their businesses to determine what parts of their business could sell more through the subscription business model. Before the pandemic, subscriptions were mostly sold by subscription-only brands, but the need for survival pushed more brands into adopting the subscription business model, both small and big brands alike.

To sell subscriptions, you can utilize one of three models: curating existing products in a monthly box, replenishing consumable products at regular intervals, or providing customers with exclusive access to products and/or experiences.

Brands that are digitally native are excellent prospects for the subscription model. Customers are more likely to commit to recurring spending in the form of subscriptions when they are more engaged with e-commerce businesses. They stand to gain several advantages, including increased lifetime values and more constant revenue.

Subscription is pretty basic for consumable and refillable products since customers know that they will never run out of supplies of your product by subscribing. Brands receive consistent monthly recurring revenue in exchange, making inventory and financial forecasting considerably easier. They can also save money on marketing that would otherwise be spent on gaining new customers.

The Way Forward

We will discuss in subsequent articles every little detail you need to consider before setting up a subscription for your business, but for starters, aside from knowing the type of subscription that is right for your business, choosing the right subscription platform is the most important element in your equation of success. While there are many options in the market, especially with the outbreak of the pandemic that contributed to the demand for subscriptions, I always encourage merchants to consider choosing a subscription management solution that most aligns with their goals and one that saves them money.

Choosing a Subscription Management Solution

Here are a few things to consider when choosing a subscription app or platform:

1. Choose a subscription management solution that allows your customers to manage subscriptions through a customer portal, reducing the need for customer support so you can have more time to focus on your business growth.

2. Choose a solution that allows your customers to make one-time orders as well as recurring orders. With such a feature, you will also be able to allow customers to make their recurring orders from some of your store's single products. You can set any of these to any interval you like, such as weekly, monthly, quarterly, and so on.

Customers will add the products they want to subscribe to their cart, that is if you've made them available for recurring orders, and then go through the checkout process as if it were a one-time purchase.

3. Choose an app that has room for automation. Using multiple endpoints around the app, you can automate actions that will allow you to offer free trials and samples, discount the first or repeat orders, or roll customers into paid subscriptions at the end of a free trial.

4. Choose a subscription solution that integrates with a wide range of e-commerce tools and Shopify applications to take advantage of the other top services.

5. Choose a solution that uses both the major payment gateways around the world as well as Shopify Payments if you sell on Shopify.

Other important considerations

While those features are pretty basic for most subscription management solutions, it's additionally advisable to work with apps that cater to customer churn (which is unarguably one of subscription businesses’ greatest weaknesses), and a solution that’s constantly developing new features and integrations to cater to your future needs.

This is why Chargezen tops my recommendation list for merchants looking to add subscriptions to their business model. But if you still don't know why, here’s a sneak peek into a few of the features I found in Chargezen that make it stand out:

1. Drive sales in a few clicks with Tiazen-marketing suite

This Chargezen feature helps you leverage data to target customers at the right time with campaigns, loyalty & referrals, SmartySMS, upsells, and bundles that drive revenue and foster relationships.

2. Quickly make insightful business decisions with deep-dive analytics

Chargezen gathers data from multiple touchpoints to give you a holistic view of your revenue, customer acquisition, user retention, and omnichannel engagement. With all the vital SAAS metrics covered, you can make data-driven business decisions that work.

3. Dunning management

Dunning is the process of upgrading payment methods, retrying failed payments, and sending reminder emails to subscribers that have cards that are about to expire. Although dunning services aren't sometimes thought of as a way to minimize churn, they do help keep customers since these users aren't typically those who would cancel otherwise. They would still be customers if they hadn't let their cards expire. They can help minimize churn as a built-in feature when combined with other Chargezen retention features.

4. Run loyalty and referral programs that help you reach new customers

Chargezen offers you everything you need to build referral and loyalty programs that create fiercely loyal customers and turn them into evangelists that help you reach new customers.

5. Connect and engage customers anywhere with an omnichannel feature

Your subscribers probably prefer to engage with you through different channels. So, Chargezen was built to help you interact with them wherever they are, all from a central inbox.

6. Increase revenue with an upsell feature

Guide your customers towards the value-added purchases they need to make. Chargezen offers you the opportunity to upsell at checkout and after checkout. Even better, you can apply flash sales, timed discounts, and other offers you have.

7. Integration and API

From CRMs, automation, accounting tools, and invoicing to tax management; Chargezen integrates with most of the apps you’re already using and constantly adds support for more.

8. Zenbrain

This is Chargezen's machine learning algorithm, which is effective in its ability to provide actionable information. Zenbrain makes Chargezen more than just another subscription management service, and more like a partner in smashing your goals!

Chargezen gives you a quick snapshot of your business 24/7; you can send invoices, respond to customer queries, or get alerts all on your iPhone or Android on the go. It also provides military-grade security and wicked fast servers that support your needs with dedicated Kubernetes server clusters that handle unexpected load spikes without ruffling a feather.

Whether it's for a new business launching subscriptions or an existing subscription business looking to scale, adding a subscription app like Chargezen that supports your business all the way is the way forward. It promises long-term customer connections and recurring orders that are beneficial to your business health as well as your customers.

If you’re looking to add subscriptions or recurring payments to your business, you can get all the support you need by reaching out to the Chargezen support team or by writing to me at if you have questions.

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