From cars to clothing and fresh produce, merchants are adopting the subscription business model for all sorts of products and services. Before these retailers onboard new customers, however, they have to convert shoppers into subscribers. To make this transition happen, merchants are adopting a multitude of features to drive conversions.
During the fourth quarter of last year, merchants stayed the course and didn’t implement significant changes. The PYMNTS Subscription Commerce Conversion Index fell from 63.8 to 63.5 points in the fourth quarter. Even so, some top merchants have adopted some features across the board. All of the top performers in the index, for instance, made their offerings clear by offering details on products and recurring payments.
Merchants also adopted other features as of the fourth quarter such as product details and free shipping. These are some of the ways that merchants such as American Eagle Outfitters and technology companies such as Apple have implemented subscription features to drive conversions and provide clarity to potential subscribers:
More than nine in 10 merchants — or 92.4 percent — had implemented product details in the fourth quarter. Moreover, when it comes to mobile apps, some tech companies are requiring more information about subscriptions. Apple, for instance, has changed its rules and required in-app subscriptions to much more clearly show the price of their offerings. Also, Apple said that information about advertising or savings should be less of a focus than the actual price for the renewal period. According to reports, Apple’s sample text for the fine print of subscription offerings reads, in part, as “Payment will be charged to your Apple ID account at the confirmation of purchase. Subscription automatically renews unless it is canceled at least 24 hours before the end of the current period. Your account will be charged for renewal within 24 hours prior to the end of the current period.”
About three quarters of merchants — or 78.4 percent — had implemented free shipping in the fourth quarter. American Eagle Outfitters, for instance, is testing out an American Eagle Style Drop subscription offering that mails out selections to consumers at no cost. Shoppers can look through choices that get refreshed weekly with the subscriptions. Moreover, they can send an item back to the retailer with a free prepaid envelope. Also, shoppers can cancel at any point and send their clothing selections back to be cleaned. And, while The Style Drop website stipulates that customers have to pick a minimum of eight items to have a box sent to them, the site recommends selecting 20 pieces at the least. Shoppers can rank their favorite choices, and the site will aim to prioritize those selections.
More than two-thirds — or 68.4 percent — of merchants had implemented plan options in the fourth quarter. Misfits Market, for instance, offers produce in a large “madness box” or a small box called a “mischief box.” And, even though shoppers have the option to buy either box on a one-time basis, Founder Abhi Ramesh said the vast majority of his consumers subscribe because of the discounts that are offered for recurring purchases. Misfit produce is still a “novel idea,” Ramesh said. “Someone may not know they want to subscribe to this for weeks and weeks,” he noted, which is why he gives customers the option to try out the service. The company also shares the story of each piece of produce through email and social media, explaining why a product is “misfit.”
Roughly half — or 47.4 percent — of merchants had implemented plan changes in the fourth quarter. Baby food subscription startup Little Spoon, for instance, provides flexibility with its service, as its subscribers can skip or shift their deliveries. Before every delivery, the company tells consumers that they are about to be charged and asks if they would like to make any changes. That approach, in turn, has developed a nice dynamic with customers, Little Spoon Co-founder and CMO Lisa Barnett told PYMNTS in a recent interview. This structure is also convenient for families who are traveling and might not need a delivery. Little Spoon sends meals to customers across the United States — except Hawaii and Alaska — on a biweekly basis for a 14-day supply.
And 45 percent of merchants had implemented a free trial in the fourth quarter. Co-working startup Reset, which allows freelancers and remote workers to use restaurants as workspaces, offers a free pass for first visits to the spaces. After those initial visits, some consumers buy a pass on the spot before they leave, while others buy a pass online before their next visit. The company offers three co-working options, including a drop-in day pass and 10-visit pass as well as monthly unlimited membership available for purchase with a major credit card. The service was founded by entrepreneurs who missed the camaraderie of the office. “We lacked those water cooler conversations that we were having at our normal jobs,” Reset Co-Founder Silva Gentchev told PYMNTS in an October interview.
While subscription services from Little Spoon to Reset are implementing different features to drive conversions and provide clarity, there is not one solution that fits all: Each merchant has to decide how to structure their offerings to suit both their individual needs and those of their customers as they seek to turn shoppers into subscribers.