3 Reasons Subscription Bundles Will Change Shopify Forever
What are subscription bundles?
Before we dive into the three major reasons why subscription bundles are changing Shopify merchant’s online strategy, we need to define what a subscription bundle is to those out of the loop.
Even before we can define a subscription bundle we must define the two words that form this newly buzzing phrase.
Bundles and Subscriptions - let’s start there.
The Beginning Of Bundles
Long before modern commerce was practiced, people around the world would barter with one another.
Bartering is a system in which people trade items they create or own for items that a willing party is comfortable swapping. If the product that I want is worth significantly more than my product, I may offer two or more of my products for just one of the other’s goods to make the deal fair.
Us humans are creatures of habit. Once we find a product that we enjoy using, we are unlikely to stop using that product until a disruption happens in the marketplace. Merchants capitalize on this fact with subscriptions. By offering their products at a discount to those who commit to purchasing regularly, both parties increase the total amount of value they receive from the transaction.
Peter The Paper Towel Purchaser
A customer named Peter plans to spend $18.99 per month on paper towels. An agreement can be made between the retailer of those paper towels and the customer.
The agreement written out would look something like:
“Peter agrees to continue purchasing my brand’s paper towels for the next 6 months. In return, my brand will apply a $4 per month discount to their purchase.”
Online, you may see something along the lines of:
“Subscribe & Save $4/mo”
Both mean the same thing, and both are mutually beneficial to the customer and retailer. The customer continues buying the product they would have anyway at a discounted price, and the retailer has locked-in revenue figures for more accurate forecasting projections.
In a previous blog on Loyalty Rewards Programs, we covered their history and how they tie in with subscriptions today.
How subscription bundles work
Subscription bundles are the brainchild of two eCommerce staples: Carts and Subscriptions.
A subscriber is allowed to add a number of predefined products to their bundle each week, month, or other merchant-selected time period. These bundles are charged as a single amount less than the total of the individual products would cost on their own.
By offering bundles in an eCommerce setting, you are able to easily increase average order values (AOV) while maximizing customer satisfaction with your brand.
To learn more about the basics of what subscription bundles are, and how they work—check out Recharge’s webpage on bundles.
Why Subscription Bundles Are Changing Everything
You found this blog because you want to know why subscription bundles are changing the face of eCommerce with Shopify. Without any more stage-setting or background info, let’s jump in.
Reason #1: The Added Value of Expert Opinion
With most needs today, the solutions offered by online brands can vary from 10s of dollars to 1000s. Customers have reported having a difficult time determining which product is right for their uses. In short, because the choice online marketplaces provide them are overwhelming.
Most consumers are looking for “the best bang for their buck”. It often takes an expert to identify which products fulfill that requirement. This expert-level curation service is a leading reason why consumers are willing to pay for your subscription offering.
Example: Camping Gear Outfitter
For Matthew, what started as a one-time camping trip with old college buddies has now become a bi-weekly tradition.
After getting invited to a weekend in the woods, Matthew headed down to his local big-box store and bought himself a tent, sleeping bag, and a few other basic necessities. Once at the campsite, he noticed others who camp frequently had gear that made his look like junk. Before the end of the trip, a lot of Mattew’s gear was already worn out and seemed ready for the dumpster. Matthew didn’t understand how to shop for high-quality gear, or how to care for it.
To combat this issue, he signed up for an outdoors brand’s subscription bundle program. Each month, he pays $100 for access to a webpage that he browses of expertly chosen products he can rely on. This month, he chose a new multitool, collapsible water bottle, and a sleeping bag to separate his body from the hard earth.
Some months, Matthew chooses one singular expensive item like a new sleeping bag, and other months he swaps out some gear in his camping pack to help lighten the load. Each bundle comes with access to videos on how to properly use and care for his new gear. Now, Matthew feels that he receives great deals on great products from a brand he trusts.
Reason #2: The Benefit of Consumer Choice
Humans are fickle creatures - that's something that anybody who has spent any amount of time on this planet can tell you. Asking your consumers to commit to handing over a chunk of change every month in exchange for a product that they have no hand in selecting is quite an ask.
By allowing your customers to choose the product(s) they receive each month, they will feel safe in knowing they had the final choice in what appeared at their front door. It is often the case that brands with a subscription bundle offering have a primary product for that month and other secondary choices if the customer feels that primary option will not suit them. In many cases, upwards of 3/4ths of customers will all choose the same primary item.
Sometimes consumers don’t want to make a difficult decision - they only want the illusion of choice. In either case, making your customers comfortable spending with your brand is always a win.
Example: Your Local Bike Shop
A fictional bicycle shop, Mountain Bikes, in Baker, West Virginia has heard from many customers that repair services are becoming too expensive. Unwilling to completely lose either the revenue that the repair side of their business brings or the customers themselves, the owner Mike had to innovate.
In a big change for the small local shop, Mountain Bikes now offers a $25 per month subscription bundle. The products customers receive include access to a matching video guide on how to properly use or install the products included.
The issue? Some folks don’t want or need the product being offered that month. That’s why Mike allowed customers to choose consumable goods such as tubeless tire sealant, CO2 canisters, handlebar grips… you get the point. While a few customers go this way each month, by far the majority choose the product that is featured in the included video.
Now, Mountain Bikes’ customers are learning how to perform maintenance, buying regularly, and feel more connected to their local bike shop than ever before.
Reason #3: Slapping Your Spin on Subscriptions
Sure you offer your products at a discount when your customers subscribe, but why should they commit to buy from you? What added value does your brand bring that your customers can’t find anywhere else?
Every merchant needs to “put their spin” on their subscription program to make it fun and worthwhile. This could be curation or content as mentioned above. It could also be a product-matching, a members-only community, a gated newsletter, or anything else that customers become attached to interacting with.
Example: Specialty Online Bookstore
This make-believe bookstore in Annapolis, Maryland specializes in reprints of books written before the turn of the century. This boutique shop offers a subscription bundle for $50 per month which allows customers to choose two of 10 owner-selected books each period.
The issue? Nobody has heard of these often esoteric books or authors.
The solution? Margaret, the owner, has created a members-only online community to which she posts short 1 minute synopsis and reviews of the 10 books offered, with her top two recommendations at the end. Customers can then like, comment, and share their own reviews after reading for themselves. For those local to the area, Margaret hosts a quarterly members-only meetup at the store with complimentary wine, snacks, and deserts.
See what she’s done? She has created a community of similarly-minded folks that find value not only in the books provided, but the curation and community that the service offers.
From software, to services, and now products - more and more merchants are moving toward a subscription-based model. Before launching a subscription-based offering, you will need to define your brand’s subscription model, whether that be through bundles or not.
If you need assistance in launching or optimizing your subscription program with bundles, our team of eCommerce experts are here to help. Reach out using the form below today to start a conversation around expanding your sales channels and revenue.