Retail subscription business model
Receiving a monthly or quarterly parcel in the mail delights subscribing customers and makes their life easier. Often, these packages may be:
- A surprise box of curated products
- A monthly supply of newly released items in a particular niche (beauty products or underwear for example), or
- A more humdrum, staple product (like toilet paper or pet food) that can solve an inventory pain point for a business or customer who needs regular stock.
The main subscription-based service model that is used in retail is to offer an “of-the-month” club, where each month, customers are sent a package of products. In return, customers subscribe using an automatic debit that is paid to your online retail business each month. Some design and luxury retailers may offer something on a quarterly or bimonthly basis at a higher price point, in order to send more high value goods, or to allow more time to source unique, quality products in their niche.
Lately, some retailers have been experimenting with providing more staple goods by subscription: businesses can order regular supplies of toilet paper or hospitality supplies, for example. (You could see how an online retailer like Cherrybrook could apply that sort of model to supplying dog food, for example.) As online data capabilities grow, there could be some big growth in this type of subscription service model. For example, if an office supplies retailer is able to analyze past customer orders, they could create a monthly pack of items that pre-empts what the office needs, based on the customer’s previous order frequency and requests. (In fact, in recent days Amazon has been trying to patent this idea of shipping products to customers before they even order them!)
We take a look at the benefits and challenges of a subscription-based business, offer some of key operational tips, and showcase five leaders in the subscription-based eCommerce industry.
MS believes subscription model is the future
Microsoft believes subscription model is the future of Xbox business
Microsoft has been slowly testing the waters with a subscription based contract model with the Xbox 360. Earlier this year, Microsoft rolled out a $99 Xbox 360 contract deal where you would have to pay $15 per month for two years.
Microsoft offered the 4GB Xbox 360 and Kinect bundle, which retailed for $299 earlier this year before the temporary price drop to $250 for $99 and a 2-year contract at Microsoft retail stores
One middle ground, Pidgeon points out, is selling voucher codes for digital games in stores.
Koller says that Sony has already been in talks with retailers and that their reaction to the PSPgo has been "overwhelmingly positive."
"With the dawn of the digital gaming age, particularly with the launch of the first full game digital platform in the PSPgo, retailers are becoming very creative in how they work to become a part of digital networks and sales," he said. "And we've become creative in how we have crafted a new business model to meet how and what retailers sell
Here: you'll love these:
"...ds of discretionary spending are not reflected in the retail sales numbers, such as buying items for cash in small businesses or garage sales, barter or paying workers in cash."
Here are some examples of The Alternate Economy at work:
* Many people are instinctually abandoning their patronage of big-box department and grocery stores like Costco, Home Depot, Walmart and Safeway with their foreign and Wall Street ownership in favor of returning their business to small to medium sized stores
Libertarian economics always fails
When will the Unicorn Economist ever learn?
their economic model is a complete failure
Plagued by the realities threatening many retail stores, Sears also faces a unique problem: Lampert. Many of its troubles can be traced to an organizational model the chairman implemented five years ago, an idea he has said will save the company. Lampert runs Sears like a hedge fund portfolio, with dozens of autonomous businesses competing for his attention and money. An outspoken advocate of free-market economics and fan of the novelist Ayn Rand, he created the model because he expected the invisible hand of the market to drive better results
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