Now more than ever, subscription services are a huge part of most North Americans’ daily lives. Thousands of subscription businesses have been started in recent years, making it one of the most interesting categories in ecommerce — and a growing number of customers are taking notice.
Last September at ChargeX 2019, ReCharge presented proprietary data on the state of physical subscription commerce. This data allowed merchants in the physical subscription space to benchmark their business for the first time against real data.
Since then, physical subscription commerce has only continued to grow and change — and so we’re back with a new report. This report provides a full picture of the state of physical subscription commerce; how it’s changing, where it’s thriving, and where it will continue to go.
More than half of customers choose monthly subscriptions
When we look at our customer base as a whole, we see that more than half of customers — 57% — are choosing monthly subscriptions. At the same time, customization is gaining popularity as people realize they prefer being able to tailor their subscriptions to suit their needs. More than a third of customers — 35% — are more likely to choose a custom plan length that falls outside the typical monthly, quarterly, semi-annual, and annual options available.
AOV by vertical
Beverage, Entertainment, and Food have the highest AOV
When comparing verticals, Beverage has the highest AOV. This may seem counterintuitive given that individual items in this vertical come in at a lower price point relative to other subscription verticals.
The Entertainment vertical only offers Box plans, which, for a vertical that tends to be highly discretionary, is the perfect vehicle for both the merchant and the customer.
Food-subscription providers had the third-highest AOV. Whether merchants are focusing on creating pre-planned meals, or making it easier for customers to make sure they never run out of their favorite snacks, it’s safe to say customers are eating this option up.
High churn can be used to improve the way you educate customers
While AOV is undoubtedly a useful success metric to look at, it can’t be considered in isolation. If AOV is high but is also paired with high churn, you’ll get what’s known as the “leaky bucket” effect, where the cost to acquire new customers becomes unmanageable.
A high churn rate doesn’t need to be accepted at face value. Rather, it can be used as a tool to improve the way you educate your customers.
No matter how thorough a merchant is, there will still be customers that choose to cancel their subscriptions. A customized list of cancellation options can provide invaluable data on why customers are leaving while also providing an opportunity for retention.
Churn by vertical
About this report
This report contains data compiled from over 4,000 merchants
ReCharge merchants are segmented into 12 different physical subscription verticals, including Beverage, Home, Health & Wellness, Fashion, Hobbies, and more
Each of the merchants profiled in this report use ReCharge to offer subscription products to their customers and each has at least 10 active subscribers