The Rise of Subscription-Based Selling and Its Setup in Magento

Introduction

In the rapidly evolving ecommerce landscape, the subscription-based model is revolutionizing the way we think about customer engagement and revenue generation. As businesses navigate this shift, Magento emerges as a vital tool, offering a dynamic platform to implement and manage subscription services seamlessly. With Magento Development Service expertise, companies can tap into the recurring revenue stream, promising a steadfast financial future. This discussion will explore the essentials of setting up subscription-based selling in Magento, ensuring businesses can leverage this model for sustained growth in the digital marketplace.

According to Zion Market Research, the global billing and subscription market was valued at $3.8 billion in 2018 and expected to grow at 15.5% and reach $10.5 billion in 2025.

What Is the Subscription Business Model?

The subscription business model follows a recurring revenue model involving weekly, monthly, or yearly customer payments in exchange for a product or service.

What Contributed to the Rise of the Subscription Business Model?

Significant strides in advanced technologies in the development of subscription management systems, automation in recurring billing, secure online transactions, availability of multiple payment methods, and use of AI in the industry have contributed to the success of the subscription business model and its rise.

Types of Business Models for Subscription-based Ecommerce

The following types of business models prevail in the subscription ecommerce industry.

Access Subscription-based Ecommerce Model:

People pay a monthly or yearly fee to access the ecommerce subscription services for products or services they want. They can decide what they want and when they need it.

Replenishment Subscription-based Ecommerce Model:

The replenishment or auto-ship ecommerce subscription model provides customers with regular delivery of the same type of product. Those products are groceries, food, medicines, dietary supplements, etc.

Curation Subscription-based Ecommerce Model:

Curation subscription-based ecommerce model consists of surprise elements. So, customers don’t know which products will arrive in each delivery. In due course, an ecommerce store collects a range of products and delivers them to customers at a predetermined period. Here is the potential to offer a high level of personalization.

Which Types of Products & Services Support Subscription-based Ecommerce?

The following types of products and services support a subscription-based ecommerce model.

• Fashion products.

• Food, beverages, and meal kits or meal-boxes.

• Wellness products.

• Pet products.

• Plants and flowers.

• Collectible products.

• Hobbies-related products.

• SaaS products and services.

• Content streaming services.

Why Rise of Subscription-based Ecommerce Platform?

Subscription-based ecommerce platforms have risen thanks to their benefits to customers and ecommerce stakeholders.

Benefits of Subscription-based Ecommerce Platform to Customers:

• Convenience: It provides comfort in payments, buying in quantity of products or services, and freedom from stresses related to order placements and shipping repeatedly.

• Personalization: Ecommerce uses its personalization capability to respect the preferences of its customers. Thus, customers get personalized services in terms of products and deliveries.

• Lower Costs: Ecommerce often offers lower costs of products or services for its subscription-based customers to keep them engaged and loyal. Discounts and other marketing incentives reduce the overall costs of products.

Constant Availability of Products: Due to the predictable needs of products, ecommerce can arrange inventory upfront and cut the risk of out-of-stock for subscribed merchandise.

Benefits of Subscription-based Ecommerce Platform to Businesses:

• Recurring Revenue: A subscription-based ecommerce platform generates recurring Revenue. So, business gains stable sources of income. It makes forecasts of future sales easy.

• Customer Loyalty: The subscription-based model ensures customer loyalty to the brand, and customers are more likely to continue using the products or services of the brand.

• Cash Flow: Subscription-based ecommerce model often receives full or partial payments upfront. It leads to positive cash flow for a business to sustain and grow.

• Lower Customer Acquisition Costs: In subscription-based ecommerce platforms, competition is low or almost nil. So, it leads to lower customer acquisition and retention costs. Once customers find the ecommerce product suitable for their requirements, they stick with it for longer.

• Good Inventory Management: Subscription-based ecommerce has roughly accurate forecasts for inventory levels of products. It makes inventory management easy.

• Good Financial Management: In this model, forecasts for finance become easy due to an accurate number of retained customers and their payments upfront.

• Upselling & Cross-selling Promotions: Ecommerce remains constantly in touch with a large customer base. It provides promotional opportunities for upselling and cross-selling related products. So, the ecommerce can build strong customer relationships over time.

How To Setup Subscription-based Ecommerce in Magento 2?

Magento 2 doesn’t have built-in functionality to support a subscription-based ecommerce model. So, you have two ways to achieve it.

• Install a third-party extension for subscription-based ecommerce on your Magento 2 storefront.

• Customize your Magento 2 store to gain full support for your custom subscription-based ecommerce model.

The Best Magento 2 Subscription-based Extensions to Facilitate Model:

Here is a list of the most popular Magento extensions for subscription. You can select anyone suitable to your budget and requirements.

1. Magento recurring payment module by Amasty.

2. Subscription membership module by Aheadworks.

3. Magento 2 recurring payment extension by Magedelight.

4. Adaptive subscriptions by Paradoxlabs.

5. Recurring and subscription payment module by Milople.

6. Magento 2 recurring payment modules by Magenest.

7. Eway subscription membership module by MageComp.

8. mPower subscription and recurring payment solution.

9. Subscription membership module by Webkul.

If you are confused about the proper selection, please take the help of your hire dedicated Magneto developer or Magento development service. They will look at your technical requirements, provide guidance, and install the extension on your Magento store at reasonable charges.

Configurations:

You must configure Magento and extension for subscription-based ecommerce setup.

• Set up settings for subscription terms, billing intervals, and other relevant parameters.

• Configure the product settings in Magento. You must follow the documentation provided by the extension provider because some extensions add new product types for subscriptions.

• You must select proper payment gateways that support your subscription-based ecommerce model. PayPal and Stripe are providing documents to do so.

Testing:

You should test how extension or customization for subscription-based Magento store setup works.

• Ensure that customers can subscribe.

• How customers can cancel subscriptions successfully.

• Check how different payment methods are working.

• Verify how billing is handled carefully.

Customer Communication:

Set up automated emails to communicate with customers at different stages of their subscription lifecycle—for instance, confirmation, renewal reminder, collection confirmation, etc.

Legal Consideration:

Address various legal aspects of the subscription business, such as

• Cancellation policies.

• Billing intervals.

• Product variations.

Monitoring & Reporting:

Use the reporting feature provided in the extension to monitor different performance metrics. For instance,

• Track subscription growth.

• Revenue growth.

Support & Updates:

• Set up a support service team to offer subscription-related solutions.

• Update your Magento and extension versions periodically or as soon as updates are available.

Enable the latest features and security patches in Magento 2 and extension.

Wrapping Up:

We have seen how to deal with subscription-based ecommerce setup in Magento using extensions. Of course, you have one more option: customization of the Magento storefront to meet your bespoke requirements.

Bytes Technolab Inc is a reliable and cost-effective Magento development company. You can hire dedicated Magento developers to set up a custom Magento 2 storefront capable of dealing with your unique subscription-based ecommerce idea.

FAQs Related to Magento Subscription-Based Selling

• What is a Subscription-Based Business Model in Magento?

This model involves customers paying recurrent fees (weekly, monthly, or yearly) in exchange for continued access to a product or service provided through a Magento ecommerce platform.

• How Does Magento Support Subscription-Based Ecommerce?

While Magento 2 does not natively support subscription-based models, it can be achieved through third-party extensions or by customizing the Magento store to support such a model.

• What Are the Key Benefits of Subscription-Based Ecommerce for Customers?

Customers enjoy benefits like convenience, personalized experiences, lower costs, and constant availability of products.

• How Do Subscription Models Benefit Ecommerce Businesses?

These models offer businesses stable, recurring revenue, increased customer loyalty, improved cash flow, and efficient inventory management.

•  What Are the Challenges in Implementing a Subscription Model in Magento?

Challenges include integrating the right extension, configuring subscription settings correctly, legal compliance, and ensuring customer satisfaction through effective communication.

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