Join The Club: The Growing Subscription Service Model

How many subscription services are you currently subscribed to? Chances are, you have more than you realize. Subscription services have become the preferred model for digital assets and have changed customers’ ownership and purchasing power in the modern age, with 8 in 10 American adults currently subscribed to at least one such service. 

These scheduled subscription services have automated our lives much in the same way we have become accustomed to letting the “robots” do our work. Driven by instant access and low entry point value propositions, customers today are comfortable with the automatic recurring billing model, provided there is no interruption in service.

The subscription e-commerce market has also grown by more than 200% over the past five years, fueled by a globally connected marketplace and convenience-driven lifestyles. The Subscription Trade Association (SUBTA) estimates that by 2023, 75% of Direct To Customer (DTC) businesses will offer subscription services. Latest global e-commerce projections suggest that by 2025 the subscription market will be worth $246.6 billion.

In a recent blog, “It’s Subscription World,” Industry Analyst Robert Jacobi noted that “The reality is that business growth now hinges on the speed by which businesses adapt to technological change. SaaS makes this simple and cost-effective. Early adoption of the right SaaS solutions for your business are critical to retain greater financial control and free up resources to focus on business growth.”

Subscription services are nothing new, and most Gen-Xers will probably remember their first subscription being a school magazine or the infamous Columbia House Record Club. Though Gen-Y and Millenials most likely never had the unique pleasure of receiving a dozen or so records in the mail (for only one dollar!) and then being hundreds of dollars in debt. 

Photo: 1970’s Columbia House Advertisement

Subscription models haven’t always been about value and honesty. Columbia House’s bait and bill, negative option billing model is just one example of how far from those bad business practices we have come with the subscription models in use today. Currently, there are three main subscription models successfully generating recurring revenue on the web.

The Curation Model

The Curation Model, based on personal preferences and impulse purchases, accounts for most of the subscription box market. Think retail and meal kit boxes:

  • Beauty (Birchbox)
  • Clothing {Stitch Fix)
  • Meal kits (Blue Apron, HelloFresh™, Imperfect Foods)
  • Gaming Gear (Loot Crate™)

The Replenishment Model

One of the best models is the Replenishment model, containing products that will generally need to be replenished weekly or monthly. Think personal care and household items:

  • Personal Healthcare (Dollar Shave Club®, Ritual™)
  • Household Items (Amazon Subscribe and Save, Secondnature) 
  • Pet Supplies (Chewy.com®)

Digital Access Model

Digital products, content, and SaaS services are also growing at a record pace. Adobe’s Creative Cloud SaaS is a perfect example,  comprising more than 65% of the companies total revenue. Other examples include:

  • Apps
  • Stock Images (Shutterstock)
  • Credit Reporting (Experian®)
  • Digital Books and Newspapers (Kindle, New York Times)
  • Online Training (Udemy™)
  • Computer Software (Adobe Cloud, MacPaw)
  • Music (Spotify, Apple Music)
  • Hosting Plans (GoDaddy, HostGator®)

Starting your own subscription service has also become part of the market, with more SaaS-based options emerging.

SaaS-based subscription services

As the Subscription Market reaches new heights, getting started has never been easier. These SaaS solutions cater to literally everyone, from total beginners on up to large corporations: 

Shopify®

Shopify® has quickly become an industry leader in the SaaS e-commerce sector. Shopify currently powers over a million SMBs in 175 countries around the world. Using Shopify’s new Subscription APIs and Product Subscription Extension, you can build a custom subscription solution. 

Recurly

Recurly is at the center of enterprise-level subscription services. Recurly boasts powerful analytics and industry-leading decline management technology, driven by machine learning to minimize churn, and maximize revenue. Streaming media giants Sling, Showtime Twitch, and CBS Interactive use Recurly’s flexible promotion creation and management tools to quickly test, learn, and iterate.  

Subbly®

Founded in 2014 by Steffan Pretty, Subbly® has focused on creating a one-stop Curation and Replenishment model “Subscription Box” SaaS platform. At the core of Subbly is a powerful subscription billing engine making complex billing requirements simple, from Cut off dates & set renewal dates to customizable billing and shipping cycles, “build-a-box” to trial periods. Add to that a powerful website builder and marketing tools, and it’s no wonder Subbly is one of the leading Subscription Box Platforms.

Creating a subscription service with WordPress 

It’s no doubt that WordPress is the go-to Content Management System for bloggers and small to medium business sites. WordPress currently powers over 38% of the entire internet and has 68% of the CMS market share, but is it right for your subscription service?

In 2015, Automattic Inc, the parent company of WordPress, acquired WooCommerce®. Since the acquisition, the team has focused on keeping the product viable in the ever-changing software market. Today, setting up an online shopping cart with a subscription platform is fully integrated into WooCommerce with plugins like WooCommerce SubscriptionYith WooCommerce Subscription PluginPaid Member Subscriptions, and SUMO Subscriptions. These solutions make it easy to accept member payments, manage members, create subscription plans, and restrict access to premium content. 

WordPress’s open-source codebase and community give you the flexibility and extensibility to create a custom subscription website and cPanel’s WordPress Toolkit can help you launch, secure, and maintain your WordPress site in a matter of clicks.

Introduction to WordPress Toolkit for cPanel

In Conclusion

No matter what model or software you choose, the subscription market is on fire with the lasting impacts of the 2020 pandemic. The growing use of subscriptions among millennials, along with  online streaming services’ rising popularity, and the low cost of subscription boxes, surely means there is no end in sight for this phenomenon.  

We hope this helps you to reach success with your subscription service. As always, if you have any feedback or comments, please let us know. We are here to help in the best ways we can. You’ll find us on Discord, the cPanel forums, and Reddit. Be sure to also follow us on FacebookInstagram, and Twitter.

Jason Nickerson

Jason Nickerson has 20 years of experience in the web industry, from e-commerce to web development, to content management and web hosting. An Open Source Evangelist and a past Board Member of Open Source Matters / Joomla, he has shared his love of Open Source worldwide. Jason is currently a member of the cPanel Marketing Team and cPanel's Community Event Planner.