Report Shows 91% YOY Growth in ECommerce Subscriptions
The analysis of more than $3 billion of subscription orders revealed triple digit growth in Food & Beverage, Pets & Animals and even surprising categories such as Beauty & Personal Care
ReCharge, the ecommerce solution powering subscriptions for the fastest growing direct-to-consumer brands, today published its 2020 State of Subscription Commerce Report. Report findings reflect the meteoric rise of ecommerce last year, with year over year subscriptions up 91% as consumers became reliant on at-home delivery and discovered the convenience of auto-replenishment. Consumers and merchants alike adopted subscriptions for the first time. ReCharge added nearly 3,000 merchants -- both established ecommerce brands and traditional brick-and-mortar stores coming online for the first time -- to connect to nearly 20 million subscribers in 62 countries. The promise of consistent delivery of products to consumers led to massive adoption of ecommerce subscriptions overall.
Each category experienced growth, with the most significant spikes in Pets & Animals, Beauty & Personal Care and Food & Beverage.
Average order value (AOV), was mixed, reflecting customers’ varying financial situations throughout the year. The biggest increases in AOV were seen in Health & Wellness, Beauty & Personal Care, Home Goods and Fashion & Apparel.
“The way we live and work changed for everyone practically overnight last year. For merchants, it meant meeting customers where they were, physically and financially. For consumers it meant turning to ecommerce for every need, from essentials to discretionary items,” said Oisin O’Connor, co-founder and CEO of ReCharge. “The subscription model solved for both challenges, providing flexibility when consumer behavior was rapidly changing. That flexibility was imperative for providing a stellar experience, whether merchants were making a first impression with new customers or building loyalty with an existing customer base.”
Customer Loyalty: Earn Trust
Monthly recurring revenue for the top third of ReCharge customers was 177x greater than the bottom third of its customers. The merchants in this top third demonstrate one of two characteristics: they are purpose-driven with a clear mission that resonates with their customers or create experiences extending beyond just product transactions.
“Subscriptions allowed us to stay engaged with our customers and to build an ongoing relationship,” said Eliza Blank, founder and CEO of The Sill, a direct-to-consumer houseplant company based in New York City. “As people spent more time indoors, we could deliver products every month that brought life and natural beauty into their homes.”
Flexibility: Provide Options
Offering buying options is key to an online merchant’s success. The top third merchant cohort made it easy for customers to skip a delivery and swap for a different product, providing flexibility to meet customer needs and financial ability. Not providing these options typically leads customers to unsubscribe altogether or purchase somewhere else.
• Among top-tier merchants, over 6 million one-time purchases were added in 2020, 60% of the overall one-time purchases performed across all merchants
• Skipping a delivery or swapping an item may be a counter-intuitive means of retaining subscribers, but the top-tier merchants accounted for 98% of all skips and swaps in 2020
“It’s a dance, balancing enough options to meet customers’ needs, while not offering so many that you paralyze them with too many choices,” said Michael Flynn, co-founder and CTO of ReCharge. “We work closely with merchants to share insights gleaned from our diverse customer base to guide best practices and integrate with other solutions they are using. Together, we ensure a seamless experience for the customer, from selection to delivery.”
Integrations: Build the Best Tech Stack
The most successful ReCharge merchants leverage integrations within the ecosystem to better communicate, plan, analyze, and provide for their subscribers. Complementary integrations have enabled merchants to:
• Generate revenue and do more with less: ReBuy - a full-series cross-sell, upsell, personalization engine, helps brands create a unique experience for customers to engage them at the right time, with the right message, ultimately resulting in higher AOV and LTV. Churn Buster helps reduce customer churn by automating failed-payment recovery.
• Communicate with customers wherever they are: Merchants use technologies like Klaviyo or Attentive for email and SMS communications, allowing them to connect with customers at the right time and through the right medium. Gorgias also allows merchants to engage with customers in a multitude of ways, reducing the time to support.
• Operationalize their business: NoFraud enables merchants to reduce the time it takes to evaluate potential fraud without slowing down the checkout process. Powerful analytics connectors like Littledata empower data-driven decisions about the business and customers.
Integrating with a merchant’s ecommerce ecosystem allows them to make smart business decisions that can positively impact their business.
“Looking ahead at 2021, we are encouraged by the continued momentum we have seen in Q1,” said O’Connor. “As we get closer to ‘normal,’ it’s clear that online subscriptions are very much part of the ‘new normal’ way merchants reach their customers, and consumers purchase products.”