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Subscription Based e-Commerce Business Is Good For Small Investors—Things To do Before Your Start

The changing business realms has pushed the businesses to think with innovation and bring out the best in their investment. Most of the businesses have complied with the change by resorting to the online platform. Subscription based e-commerce business has seen rise of 3,000% which is completely unprecedented in the last three years. As a business, if you wish to go ahead with this model, in that case, you need to keep in mind few important aspects. This blog will help you understand how to proceed with your subscription based e-commerce business.

Choose Your Industry

Supposedly, if you are into grocery & food, fashion, pets or beauty products, in that case, to create your market you need to go ahead with the promotion and marketing. It is very difficult for a new business to go ahead with a lot of capital investment for advertising and promotion. Most of the times, it is difficult to sell your own products, it will increase the profit margin but the possibility of the sales diminishes. Such a model goes well with inexperienced investors however, you will have to understand the cost.

Key Areas with advantage

The brick and mortar shop wouldn’t help you get better incentivization as compared to e-commerce subscription. The key areas where e-commerce subscription can help you grow:

Replenishment: There are many products that needs to be replenished very often. Products like razors, tampons, makeup and even food. Most of the consumers are always looking for new products or up-grade of the existing ones. With replenishment, the sellers don’t have to stock the products due to the fear of running out of stock. With the subscription based e-commerce, the possibility of the sales and profit multiplies.

Discovery: One of the main advantages you can get with subscription based business is the new product in the market. When you are selling through a subscription based store, you can easily get new products and trends. The box packing and packaging is like a gift to you which you can use to better help in the discovery of your products in the market. This will have a positive impact on the sales.

Ongoing Services: Subscription based e-commerce model would resonate well with the store owners who wish to go ahead with an ongoing service. When you have taken a subscription based e-commerce service, you can sell as many number of products as you want.

Identify Your Target Audience

You need to know your customers adequately. It is of greater advantage when you have known your customer and accordingly you have planned out the action. If you are selling such products which can arouse the interest in the teenagers and youths, in that case, you can vehemently use the social media. Youths and teenagers are active on the social media and if you are running campaigns over there, in that case, it can help you increase your sales possibility.

Create the Value Proposition

Every product in the market have their unique potential and based on such potentials they are demanded in the market. You will need to educate the customers about the solution which would be delivered by your product. You need to work on the following parameters to increase the demand.

  • Defining the Problem: You need to understand the problem of the customers and subsequently you will have to work on the solution.
  • Evaluation of the subscription service: You need to understand how well the products will solve the problem of the customers.
  • Viability Prediction: Based on the marketing and product placement in the market, you must analyze the product prediction and how well it will be adopted in the market.
  • Build your value proposition: You need to be very thoughtful at the time of building the value proposition for your business. Consider the customers who have been dissatisfied and this you can only understand when you have research adequately on the market dynamics. This can help you create a better USP for your product.

Set a Good Pricing Model

The basic flaw of subscription based e-commerce is the failure to evaluate on the pricing. You need to understand that in order to grow you need to get the maximum operational profit. This can only happen when you have analyzed the profit model and accordingly you have fixed the price. You need to do proper competitor analysis and subsequently you have to plan out the action. Customer Lifetime Value is of paramount importance and you will have to understand that as well. The customer would be associated with your e-commerce subscription service as long as they are getting new trends. You need to understand that and accordingly you will have to plan that.

Startup Capital

Subscription based e-commerce allows you to start with minimum capital. At the same time, you can easily save on the overhead expenses. By knowing the cost of Goods Sold and Customer Lifetime Value, you can easily decide upon the capital investment. Many secondary services have been given in the subscription based e-commerce and they have helped even the small businesses to grow exponentially with minimum capital. Most of the technical works are done in the first place which gives the businesses the advantage to customize the designs and pick the specifications which can best serve their purpose.

Shipping and Fulfillment

Subscription based e-commerce business is entirely different from normal e-commerce business. In subscription based e-commerce business, you will have to fulfill the demand and shipping should be proactive. Most of the times assembling of different items is tough task, you can make it happen by considering few essential factors:

  • Are the items which you are about to sell perishable. Are you able to buy in bulk and ship them conveniently, you will need to know this.
  • E-commerce subscription based business deals with new companies regularly and there are new products as well. You need to finalize that.
  • You need to know whether you need custom packaging or cardboard boxes would be fine with the product.

Product presentation is also important factor. You need to know that as well. You must understand the need of the industry. Decorated packaging might strike the chord of the customers. You will have to anticipate that and subsequently you need to take the call.

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