Subscription ecommerce is booming. There are thousands of “box” merchants selling everything from beard oil to brioche — weekly, monthly, and quarterly. Finding a distinct segment in the ecommerce subscription market is vital to success.
Subscription ecommerce has long been one of the most popular forms of online retailing. Its popularity spiked in July 2016 when Unilever, the consumer products firm, agreed to pay $1 billion for Dollar Shave Club, an ecommerce subscription service. Dollar Shave Club showed just how highly valued subscription services and online marketing expertise is in the retail market.
What’s more, this popularity is probably justified, since there is good evidence that subscription retailing can lead to lower costs and more profit. If this all sounds good, you might be wondering what sort of subscription your business could offer.
Here are three questions to help you find your ecommerce subscription niche.
What Problem Does Your Subscription Solve?
Subscriptions are shopping with commitment. Subscribers have not simply bought a product, they have agreed to be automatically billed repeatedly for it. So you’re going to need to give them a reason to make the additional commitment, to subscribe rather than simply buy once.
Typically, ecommerce subscription services will solve a problem in one of three ways:
Replenishment subscription services. Subscription services make replenishment convenient. If a man shaves his face, he could consume razors, shaving cream, styptic pencils, and aftershave balms. Keeping these shaving essentials on hand might require a few trips each month to a local store. Or, he could subscribe to an ecommerce subscription service that will send a regular supply of these items right to his door. The latter is far more convenient, and may be less expensive.
A replenishment subscription service, in other words, makes it easy to restock consumable items. And it made Dollar Shave Club worth a billion dollars.
If you can find a replenishment niche, your ecommerce subscription company is likely to enjoy long customer relationships and a steady stream of revenue and profit. Find an item that shoppers purchase repeatedly and regularly, and make it easier to get that item via a subscription.
Discovery subscription services. Shoppers have a broad range of product options. As an example, think about the number of pet toys currently available.
You might choose a chew toy, a plush toy, or an interactive toy — yes, there are interactive pet toys. Each variety comes in a rainbow of color options from an army of manufacturers. There are toys for inside pups or outside doggies. In fact, there are simply too many options for a pet owner to take in.
A discovery subscription service, like BarkBox, helps shoppers find unique or interesting products in an ocean of product options. Each month, the subscriber experiences a new discovery to share.
If you can solve the product discovery and selection problem, you may have a viable subscription service.
Service subscriptions. Some ecommerce subscriptions provide an ongoing service. The classic example of solving a service problem might be Netflix. The well-known service lets subscribers watch movies or series on demand.
Some, if not most, software-as-a-service businesses could be called service subscriptions.
Find a service that your business can provide and let shoppers subscribe.
How Much Competition Will You Face?
Once you know what sort of problem your ecommerce subscription service solves, consider what your competition will be and how much of a challenge those competitors represent.
Look for opportunity. There will be niches with few competitors but also relatively little opportunity. Other markets might have several good competitors but plenty of room for your business, too.
Earlier I mentioned BarkBox as an example of a product discovery subscription service. BarkBox would be a strong competitor for any subscription service entering the pet toy market. But that market is massive and the vast majority of pet toys are not purchased via a subscription — there may still be a considerable opportunity.
Similarly, there are several excellent services offering beauty products. But the cosmetics market is so massive that there might be room for dozens or even hundreds of alternatives. And there are dozens of beard oil subscriptions service and that market is far from saturated.
What Would You Buy?
As you look for your ecommerce subscription niche, try to find something you’re passionate about. When you choose a niche that you understand or enjoy, you may be able to service that niche more effectively.
For example, if you started a fishing lure subscription service that promised to deliver the perfect lure for fishing conditions in the subscriber’s area, you would need considerable fishing expertise.
It can be helpful to just think about a service you would subscribe to, as a consumer.
If you can come up with a subscription service you’d use because it solves a problem and it is in a market with opportunity, you’ll likely have a success.