What to consider when building subscriptions into your ecommerce experience.

Taco Bell now offers a taco subscription called the Taco Lover’s Pass. Now you can “Live mas” (the company’s slogan in case you aren't familiar) by paying $10 and getting one taco per day every month from the TexMex Giant. Maybe that’s crazy, but the Chief Digital Officer says that it shows Taco Bell’s "commitment to digital innovation and value." The early results are noteworthy: “20% of pass purchasers were new to the Taco Bell Rewards Program; meanwhile, an additional 20% renewed it for a second time.”

Subscriptions are on a mega-rise, with some industry analysts predicting that the digital subscription economy will surpass $1.5T by 2025. What do you need to know about building subscriptions into your ecommerce experience? And what can Commerce Layer do to support your product subscription business? We’ve put a primer together for you as you consider building out this aspect of your business.

Why are subscriptions important and increasingly visible in today's ecommerce world?

For one, subscriptions increase customer retention. Taco Bell’s big bet on building a taco loyalty program is one tasty example. Subscriptions increase loyalty, subsequently more customers buy from companies they are loyal to. Rewards and loyalty programs also make customers feel special with premier access to something others can’t get, like 30 tacos a month for $10.

But that’s not the whole enchilada. Subscription programs help businesses forecast and predict revenues, manage inventory, and lower overall acquisition costs, particularly when people buy and subscribe. Customers also love the convenience factor. Think of curated selections of physical products, like BirchBox, which delight with new surprises each month.

What are the different types of physical product subscriptions?

Subscriptions can mean a number of different things, depending on what you are trying to build. We've created a list of the most common types of subscriptions you might want to offer. We've also created a simple framework to help explain each use case and compare similarities or differences. While there might be many layers to this burrito, our list of subscription options includes the most commonly used:

1. Curation // Subscriptions boxes
2. Buy and subscribe // Replenishment
3. Open vs. closed subscriptions
4. Exclusive mailing list
5. Renting physical goods

Let's dive in and look at what makes each one unique.

1. Curation // Subscriptions boxes

• Who?
  Customers who want variety delivered to their door.
• How often?
  Typically, curations deliver weekly or monthly.
• What’s inside?
  Brands offer selected products, and can even throw in mystery items to surprise customers.
• What else?
  The curated selection gives brands the chance to offer other promotions within the box.

2. Buy and subscribe // Replenishment

• Who?
  These are for customers who use the product on a regular basis and need to restock after a period of time (e.g. razor blades)
• How often?
  Weekly or monthly, depending on the use.
• What’s inside?
  Typically the disposable product that someone uses daily.
• What else?
  Brands who use this effectively often offer a subscription moment just after an order has been placed. The obvious example most have seen are razor blades at companies like Harry’s or Dollar Shave Club.