Subscription Commerce

Consumers Battle Subscription Friction As Fraud Scrutiny Tightens

Subscription Model: From Ownership to On-Demand

Subscription commerce stands as one of the hotter parts of retail, with companies such as Lyft launching subscription plans and other firms expanding their existing subscription services. But news involving lingerie retailer Adore Me shows how the model, if not handled properly, could lead to angry consumers and declines in brand reputation.

In a CNBC story on Monday (Nov. 19), customers who didn’t realize that they had signed up for Adore Me’s monthly subscription plan talked about overdrafts and other consequences. One of the customers interviewed said she bought apparel from the retailer, but “didn’t realize she was automatically enrolled in a monthly subscription service, an increasingly common practice with online retailers that may catch shoppers off guard in the rush of holiday shopping this year.” She figured out what was going on when her debit card was declined at a coffee shop.

Among the problems?

According to the report, “some online subscription companies employ confusing business tactics, such as opting customers in to recurring charges without their knowledge and making it very difficult for shoppers to opt-out of the monthly fees.”

According to the new PYMNTS.com Subscription Commerce Conversion Index™, this type of retailer is growing not only in the B2C space, but in B2B as well. “Financial institutions are also taking an interest in subscriptions,” the report says.  “JPMorgan, for one, is now providing subscriptions to its firm-wide Athena software, which already has 208 investors signed onto it.”

One feature that separates top and bottom subscription retail performers in the Index involves the ability to cancel plans. As the report said, “90 percent of top-performing subscription services made it easy for customers to cancel their plans, compared to just 15 percent of bottom performers.”

Still, the report went on to say that “top merchants have dropped a few features — like rewards and marketing opt-in — though customers can find many of those features on bottom 20 merchants’ sites. Only 10 percent of top merchants offered marketing opt-in in Q3 2018, compared to about 20 percent of middle and bottom performers.”

Subscription commerce continues to grow, but retailers continue to revise their models as they try to avoid frustrating consumers.

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