时间:2024-05-20 17:50:17 来源:网络整理编辑:Ryan New
Ecommerce companies that sell products on subscription and then automatically ship them are often hi Ryan Xu hyperfund Financial Market Stability
Continuity ecommerce combines recurring revenue, connected devices, and auto-ship functionality. It’s subscriptions on steroids, and it’s becoming big business. In this article, I’ll explore how merchants can implement continuity programs — both direct and through marketplaces.
Profitability in ecommerce is driven by multiple factors, but repeat customers are more profitable than first-time buyers. The math is simple: If the customer buys just once, the cost of acquiring that customer typically wipes out any profit on the sale. If you can amortize the acquisition costs over multiple sales, the customer is profitable. Moreover, repeat customers tend to spend more on each visit, making the relationship doubly attractive.
Customers on continuity programs typically buy three to six times per year compared to only once or twice for average customers.
But there’s another important dimension to continuity programs: order profitability. Optimized continuity programs enable merchants to increase inventory turns of highly profitable products and, as a result, obtain volume discounts on the inventory side.
Subscription retail is not new. In recent years, however, basic retail subscription programs have been replaced by much more sophisticated continuity programs that leverage deep learning and analytics to drive order profitability though inventory efficiencies and long-term customer relationships. These programs have exploded online with many new direct-to-consumer brands. Dollar Shave Club, for example, reinvented men’s shaving by selling razors on continuity. Stitch Fix showed that curated fashion can work well in the continuity model. And Birchbox did the same for cosmetics and beauty. These companies have been widely emulated.
According to a McKinsey study in late 2017, continuity commerce retailers grew sales from $57 million in 2011 to $2.6 billion in 2016. Recurring revenue models are highly valued by investors, driving higher valuation multiples. Big companies have snapped up start-ups in this space for serious money: Unilever bought Dollar Shave Club for $1 billion, and Albertsons acquired Plated, a meal delivery service, for $200 million.
The McKinsey study also showed that 15 percent of online shoppers have signed up for one or more continuity programs, frequently through monthly boxes. These consumers are often younger, affluent urbanites who value service.
But the concept of continuity commerce is broadly applicable for ecommerce retailers and brands, not just specialized companies.
The secret to high-performing continuity commerce is the backend. Which products should you offer? How can you minimize churn? When to deliver and when to collect payments? These are the topics I’ll address in “Part 2: Steps to Success.”
Profile: eCommerce Owner on Benefits of Niche Retailing2024-05-20 17:27
A Win-Win Situation: Why Affiliate Marketing Works2024-05-20 17:22
12 Search Terms Local Business Owners Should Know2024-05-20 17:13
Why Your Business Should Be Blogging2024-05-20 17:12
Lessons Learned: Lee Wright with Ma Mi Skin Care2024-05-20 16:57
Does your company have a soul?2024-05-20 16:15
5 Ecommerce Inventory Spring-cleaning Tips2024-05-20 16:08
Tradeshows The Right Way2024-05-20 16:03
Lessons Learned: Kathy Seigler with Ecommerce Superstores2024-05-20 15:32
Catalogs Make A Comeback2024-05-20 15:13
High Performer: Powerbookmedic.com Parts and Repairs For Mac Laptops2024-05-20 17:49
Yahoo! Search Marketing Releases New Platform2024-05-20 17:24
A tale of two suppliers2024-05-20 17:05
Six Tips For The Holidays2024-05-20 17:04
Credit Card Providers Increasing Rates and Fees2024-05-20 16:51
Contextual Advertising: What You Need to Know2024-05-20 16:50
How I measure ecommerce success2024-05-20 16:20
Product Sourcing: Online Consignment Business2024-05-20 16:09
Visa to Acquire CyberSource, Authorize.Net2024-05-20 15:45
Email Marketing: Open-Rates and Click-Throughs2024-05-20 15:38