State of Subscriptions: 5 key trends we learned from ReCharge’s 2021 report

| By The Taproom

State of Subscriptions: 5 key trends we learned from ReCharge’s 2021 report

2020 was a huge year for ecommerce across the board - brick and mortar businesses going online, more consumers staying at home, and increased logistical demand are just some of the ways in which the year’s events profoundly impacted the ecommerce industry. Analyzing the data behind this surge in ecommerce makes not only for interesting reading, but gives insight into the potential future of the industry. Going even further, looking at specific areas of growth can give Shopify merchants the direction they need to continue growing in 2021 and beyond. 

One of these areas is subscriptions and recurring payments, something the team at ReCharge are experts in. They recently released their annual report on the state of subscription ecommerce in 2021, and today we’re going to look at the five key ideas we took away from their research.

What was in the report?

For context, ReCharge’s report looks at how subscriptions grew by comparing the data from 2020 and 2019, then analyzing key trends and what this means for the market in 2021. Over a 12 month period, they analyzed data from 9000+ merchants in 62 different countries, accounting for nearly $3 billion in orders across 20 million customers. Their analysis in the report looks first at the impact of 2020 on the subscription commerce space, then moves on to look at the top 30% of merchants in their data set to figure out what successful merchants did to leverage subscriptions.


#1 - Greater flexibility results in greater rewards for merchants

One of the biggest challenges facing merchants when offering subscriptions is finding those customers that are going to stick with the subscription long-term. The most successful merchants are those that have recognized the need for flexibility in the ordering process for customers. There are three ways in which merchants can offer additional flexibility:

  1. Skipping - the customer can choose to skip their subscription for a period of time, but will ultimately start back up.

  2. Swapping - the customer is given the option to swap products in their subscription for those they might prefer or need more.

  3. Order additional products - the customer can add one-off additional products to their usual subscription.


By offering these additional options, you’re giving more opportunity for your brand to meet your customers’ needs. Rigid subscriptions that are difficult to change to suit needs won’t appeal to your target market, as they’ll be able to find competitors with greater flexibility. 


#2 - Use first impressions to increase customer Lifetime Value (LTV)

Interestingly across most categories, whilst many brands saw a massive increase in subscribers they either saw little or negative growth in LTV. What this means is that customers are making one-off purchases then not carrying those through to long-term subscriptions. What this means for merchants is that they need to find ways to improve the customer experience in order to encourage loyalty. First impressions count, so merchants should ask themselves what they can do to improve the customer experience - what can you do to make the experience memorable and meaningful? 


#3 - Leverage loyal customers through subscriptions

A big change to ecommerce was more brick-and-mortar businesses and larger traditional route-to-market brands entering the space. This is true too for subscriptions. In the report ReCharge uses the example of Oatly - they traditionally sell their product in grocery stores and other physical retail outlets, but they created an online subscription offering to meet their customers’ needs where they were at that moment in time. That meant that they were able to retain their loyal customers who would ordinarily purchase their products in a physical store rather than the customers looking to a competitor brand who offered greater convenience. The takeaway here is that brands can leverage those loyal customers by offering subscriptions and making your product more available and convenient to your customer base.


#4 - Brands with purpose make a greater impact

With so many different brands online, consumers have more choice than ever before. This is great on the consumer side, but it can make it more difficult for merchants to differentiate themselves and attract customers away from competitors. One of the ways in which ReCharge found the top merchants done this was through brand purpose. By having a strong brand purpose, you’re giving your customers something beyond just a product transaction. Whether it’s sustainability, accessibility, health or mental wellbeing, or a host of other reasons, think about the “why” behind your brand. 


#5 - Use integrations to improve the customers experience

A key differentiator between ecommerce stores is the customer experience, and this was a major factor for subscription commerce merchants in 2020. By leveraging integrations, merchants were able to better communicate with and provide for their customers. This included integrations related to operational efficiency, communications, and analytics. In order to improve the customer experience, merchants should evaluate their current tech stack and look for any improvements that could be made to different areas of their ecommerce experience.

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Put simply, the reason subscriptions are the way forward for many consumers is because they meet their needs where they are right now. If you currently offer subscription options, then consider looking at integrations to improve efficiency and communications or offering additional flexibility to secure loyalty in your one-off customers. If you don’t have a subscription option for your products, then this could be an area for development for your brand in the future to differentiate your offering from your competitors.

These are just some of the takeaways from the ReCharge report - the full document is packed with great data, insights, and recommendations. Click here to check it out.

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