Subscription Business Model: What Types Are There?
There are three main types of subscription services in the consumer world.
First, there’s what’s called access-based subscriptions. This refers to multimedia services, like Netflix and Hulu, as well as to fulfillment services, like Amazon Prime, that offer free and expedited shipping options.
Replenishment Subscription Program
For the purposes of this article and the purposes of the retail sector, we’ll focus primarily on replenishment subscription programs. Some subscription programs function to provide the consumer with a streamlined refill of household items that they need. For example, the infamous direct-to-consumer company Dollar Shave Club sends recurring shipments of razors to individuals at a competitive subscription price so that they never have to worry about running out of razors or shaving with a dull edge.
Similarly, toothbrush company Goby’s subscription model sends new brush heads on a specific schedule to ensure that you’re swapping out new bristles according to dentist recommended timelines. Both of these subscriptions are based on the function of keeping the consumer stock up-to-date and refreshed.
Curation Subscription Program
Alternatively, some subscription boxes are designed to change every shipment. These “curated” options are based on taste, style, and variety. Companies will use their knowledge of products on the market, as well as specific customer preferences and feedback, to choose curated items to be included in the box.
Clothing companies are the most prominent examples of this type of subscription. Box clubs such as Trunk Club and Stitch Fix will put together seasonal packages of different clothing styles based on your personal preferences and past information about you. Wine clubs are another common type. This model is designed to keep the customer curious and excited.
Both Serve A Purpose
A friend of mine who’s a busy lawyer has two subscriptions that he pays for monthly. One is Dollar Shave Club, which he says is useful to him because, as he explained, “I’m super busy with work, and I liked the set it and forget it aspect.”
He also subscribes to Maguey Melate. They send him 2 bottles of mezcal per month. This curated and informative program helps him learn details about the variety of bottles he is drinking. More importantly, “getting access to unique local mezcal and supporting the producers” is a major selling point and keeps him satisfied with the subscription.
The subscription-based retail model can fit a range of consumers. What’s your niche?