Subscription Commerce

Helping Merchants Play To Win In The $500B Subscription Space

More than half of all Americans now subscribe to digital news or entertainment streaming services, and such offerings are already beginning to crop up in new industries, like cars and financial services.

Companies are developing new subscription boxes, tiers and perks to retain customers’ loyalty in the face of rising competition, too. Retailers, like Walmart, are using related retail packages to compete with rivals such as Amazon, while digital services like Spotify and Apple Music continue to fight for music lovers’ attention and loyalty through competitive features.

In the May edition of the Subscription Commerce Tracker, PYMNTS looks at how subscriptions — especially digital ones — are spreading worldwide, and examines their rise in a number of new industries.

Around the Subscription Commerce World

Music streaming services Spotify and Apple Music are competing to grab paying customers. Both services offer free tiers to entice customers, and both are searching for ways to create more customer loyalty. The efforts seem to be effective, as Spotify recently reached 100 million subscribers, and appears to be pulling ahead of rival Apple Music. The latter boasts approximately 50 million paid subscribers.

Music streaming’s popularity is also on the rise in other markets, reaching $1.4 million in China in 2018 — and it is only set to grow further. Music-related subscriptions are projected to account for a significant portion of that growth, with Chinese players like NetEase and TME jockeying to gain customers through upcoming features and subscription paywalls.

Digital subscription services are far from the only companies dealing with increased competition, however. Food delivery entities like DoorDash and Postmates have recently launched subscription tiers that bypass typical delivery fees as online food delivery apps grow more popular. In fact, consumers may soon be able to select a new food delivery subscription by Uber Eats, according to a recent leak.

How Merchants can Compete in the Expanding $500 Billion Subscription Space

Just offering subscriptions isn’t enough to gain customers these days — not with the subscription market set to reach more than $500 billion by 2023. Merchants must also deal with consumers who are rapidly changing their minds about what they want, and offering competitive features, pricing and services can be a significant challenge for small and medium-sized businesses (SMBs).

Providing a unique customer experience to subscribers is crucial, according to Robin Reodica, product management executive director for Bank of America Merchant Services — especially with more eTailers unveiling their own subscription plans. Download the May Subscription Commerce Tracker to read its feature story, and learn more about the challenges subscription-focused SMBs are facing.

Deep Dive: Learning Platforms and the Subscription Economy

Like retail, the travel, entertainment and education industries have moved to the digital world. Many educational services platforms are now making use of subscriptions to retain customers, and provide them with both flexibility and personalized content. However, eLearning subscription platforms need to ward against fraudsters as digital subscriptions’ usage grows.

To learn more about how these platforms are dealing with subscriptions and responding to fraud challenges, visit the Subscription Commerce Tracker’s Deep Dive.

About The Tracker

The Subscription Commerce Tracker, powered by Recurly, explores how companies use subscription-based commerce to build long-term customer relationships and steady revenue sources. The report includes notable developments in the market and the companies that are rapidly innovating in the space.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

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