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Subscription Model For Selling Physical Products

icon8 May 2023
icon12 minutes read
icon14 minutes audio
iconMemory Squared

Table of Contents

What is a subscription service?

Subscriptions have become very popular in recent times. Streaming platforms such as Netflix or Disney+, digital products like Microsoft Office, fitness or library services - all use a subscription model. So what is a subscription?

A subscription is a way of selling products or services with recurring billing for a lower cost than buying the same product or service for each individual use.

With a fitness pass, for example, you can either pay in recurring intervals for a pass that lets you go to the gym anytime you want or you can pay for the ticket every time you want to train. Buying a fitness pass is much cheaper than buying a single ticket because the gym rewards customer loyalty by offering exclusive discounts. This is the core of a subscription model.

Everything that needs to systematically reoccur or is being used in our daily life can be subscripted. There are many different subscription models, which we're going to discuss in this article.

A calendar surrounded by arrows going in circle from money to correct mark and back
A physical product subscription is one of the most popular and successful subscription type and is lately gaining more and more popularity

Is it possible to sell physical products as a subscription?

We usually associate subscription services to be used on streaming platforms or in any ticket-related business, such as gyms or public communication. There's a lot of competition in the consumer market and businesses are fighting for customers' attention by trying to stand out.

Companies selling both physical and digital products are willing to gain consumers by addressing the customers' needs, not only with the product itself but also with the way the product is being sold. Young audiences are especially difficult to attract - they're looking for sustainability, environment friendliness and convenience. They don't want to waste time buying a systematically used product over and over - they're looking for a product that will deliver their needs without spending time on repeat purchases.

You should also be aware that the fine line between a product and a service is becoming less and less distinctive. Products can now be also sold as services such as in the case of car sharing or diet catering.

Nowadays, you're not selling a product itself, but the whole service surrounding the product.

Let's take a look at diet catering - customers are purchasing not only the food but also the service of having the food prepared and delivered. It saves the customer time they would spend sitting in the kitchen, checking the ingredients list, and cooking it and storing it for later.

At the same time, services can also be sold as a product, for example, voucher gift cards, hotel reservation platforms, or taxi-related services. Customers are buying a product - they know its price beforehand, and they're paying for it in advance, but the product itself is a service.

A heading
Defining the type of the product, that we want to sell helps in creating an adequate business and financial plan

Products that can be sold as a subscription

There are some product characteristics that make items suitable for a subscription model. Before you start selling your product, you must consider the most appropriate way of doing so. What kind of products can your customer subscribe to?

Everyday products

Products that are used every day have good potential for subscriptions. Fruits, vegetables, snacks, pet food, coffee, or even vegan substitutes are some examples of products that could be incorporated into subscription sales. These products are the best recurring subscriptions since they are needed and consumed daily and take up a lot of a person’s time.

Products that wear out

Another group of products that show great subscription potential are products that wear out and get broken with time. This group includes beauty products, chemicals, baby diapers, razors, and even candles or books. A subscription model for these products helps your business to set a stable income and create convenience for the customer. You can set your subscription payment model to recurring payments, so your customers don't even have to think about their supplies - everything occurs without their inference.

Collectible merchandise

Collectibles are one of the most popular ideas for a subscription box; these are also known as mystery boxes. Notebooks, figurines, cups, stickers, games and CDs, everything that can be collected or displayed has the potential to become physical product subscriptions. Fans often choose mystery boxes because the average order value is much smaller than the value of the box contains.

A glowing bulb
Inspire yourself, check your competition - be a step ahead and attract more customers!

11 cool ideas for physical goods subscriptions

Field Notes

Field Notes is one of the subscription businesses that offer collectable goods. They offer a variety of notebooks that mostly come in series and often include added extras. If your work requires a lot of notes, writing and you would like to do it in style - Field Notes is a great provider.

Estrid

Estrid is a Scandinavian startup that started as a razor subscription service for both men and women. They offer a one-time purchase of a razor and exchangeable blades on a subscription basis. This vegan, environment-friendly company gained so much popularity in the last year or two that they were able to expand their offer to the subscription of cosmetics such as razor gels or body care lotions.

Illumicrate

This unusual startup sells book-related exclusive content. Every month they announce a new theme that includes hints or trigger warnings. The mystery box contains a book, which is always printed in an exclusive edition, as well as some beautifully made merchandise related to the book and its contents. They also offer special editions of subscription boxes, which are usually a series of books. The attention to detail and breathtaking merchandise made Illumicrate one of the best book subscriptions available.

Colorful candles in jars
Candles and scented waxes became the ultimate cosy decoration of every home

Vellabox

The idea of this subscription is simple - after filling out a short form, the subscription management software chooses the best scented candles for you and sends them as often as you would like.. Do you like your candles to be floral or citrus? The online store helps you decide and you can have a relaxing package on your doorstep whenever you choose. The subscription contains a different candle every month, as well as a lifestyle freebie and a playlist created for the scent.

ON THAT ASS

When it comes to physical products, this subscription business is a great example. ON THAT ASS sells subscriptions for male boxer shorts. You can choose your size and the style of your underwear - you can choose plain or colorful, their quality is amazing, and they look great! If you'd like a fresh pair of boxers in your wardrobe every month - subscribe to their product!

YourKAYA

This subscription business is a game-changer in Europe. Founded in Poland, YourKAYA is spreading love, knowledge and body-friendly products for people concerned with vaginal hygiene. They started with tampons and menstrual pads, but they quickly developed a variety of intimate hygiene cosmetics that have a strong following all over the world. YourKAYA is also involved in international charity donations and sex education programs in schools. They are a great example of taking things into your own hands and succeeding!

TokyoTreat

The fascination for Japanese drinks and snacks has become a trend in recent years. In the case of TokyoTreat, for a monthly subscription, you can get a mystery box filled with Japanese snacks, drinks, cookies and instant ramen. They also offer limited editions of their mystery boxes - for example, every spring they prepare special sakura-themed products, which are a real treat for their customers.

LootCRATE

The best place for movie lovers, horror freaks, anime fans and gamers. LootCRATE offers mystery boxes that are different every month. Thanks to their many license collaborations, every piece of merchandise is an official item from a movie, game or anime. This way you can get great, unique merch straight to your mailbox!

a child making glasses out of their hands
It's difficult to keep a child entertained - a kids subscription allows your kid to learn by playing!

KiwiCo

Important people need an important subscription model. KiwiCo offers subscription boxes filled with toys and puzzles for every age; from babies to elderly people, everyone will find something that will entertain them for hours! You can choose from various options, adapted to the age and needs of the customer - you can just unpack it and play!

The Coffeevine

A perfect gift for someone special, or for yourself, the Coffeevine offers a variety of whole-bean coffee from different roasters all around the world. You can choose how many packages you would like to get every month and wait happily for them to arrive. You can obviously choose the size of the box and roast profile of the coffee, so your drink will always be perfect!

Escape the Crate

This subscription business is truly unique with its subscription model and product offered. Escape the Crate work on a bi-monthly basis, to provide you with a box with an entertaining mystery to solve. A jailbreak, a murder, set in a jungle, or even a UFO - every box comes with a different story, a different plotline and different props that you will use to escape the crate alive.

A statitics showing, how much money are spending people on subscriptions
Subscriptions are instantly gaining popularity and more people is willing to receive their products conveniently | Source: C+R Research

Pros of a subscription business model

Monthly subscriptions ensure a stable, predictable income, which is essential for your business.

It also helps you estimate how much of a product you need, so you're not left with unsold products. This way you can maximize the efficiency of your warehouse space, and prepare for upcoming projects accordingly.

Subscriptions do not just offer financial advantages. Thanks to the recurring charges type of service, the customers are also constantly engaged in your product and its developments. If they are already purchasing your product, they are more likely to try your new offer than buy the same thing from another company - this way they're saving money and time and get one package with everything they need instead of having to use several services.

A man holding a credit card
One of the main reasons of cancelling a subscription is payment failure. Customers expect a flawless service!

Cons of a subscription business model

Customers that are loyal to one seller like to be appreciated by them. Over time, customers become more demanding of your service and expect developments.

Competition is always growing stronger, so it is important to care about customers’ experiences with your product and to deliver freebies and perks to reward loyalty.

Having a list of recurring customers also makes you reconsider your marketing strategy in terms of finding new ones. Customer retention is very important, but you also must remember to not rest on your laurels and gather new clients. This is easy to forget when you have a stable income from your subscription's monthly fees.

The subscription model also restricts your elasticity when it comes to sales, seasonal offers, or price shaping. A promotion aimed at new clients might make your current customers angry. A promotion toward loyal subscribers does not attract new customers. You have to be very cautious when it comes to your marketing and financial decisions.

It's also important to always check on your competitors, who can offer the same products at a lower price - this could drive customers away from your business and make new customers less likely to subscribe.

A damaged packaging and a warning sign
Carefully choose your packaging and logistics options - customers expect a full-fledged product for the price they're paying

Subscriptions services for e-commerce businesses

Starting a successful subscription business takes a lot of planning. You have to rebuild your existing website to handle a subscription service or create a new one for product subscriptions only. You also should decide how you would sell subscriptions - do you want to sell digital products or sell physical goods? If you want to sell digital product subscriptions, you have to be prepared for digital downloads since it would require tighter digital security than selling physical goods.

After setting up the subscription model, the next decision is how you would sell subscriptions. You must decide the cost and timescale of your subscription services, and include elements such as reducing the cost for loyal customers.

You should also consider a payment method and gateway. Recursive payments are popular and multiple payment gateways support them but they can be more tricky to implement than regular ones.

A handshake
A trustful technology partner can be a real profit for your company

Subscription model e-commerce

Selling memberships and subscriptions is very different from selling products themselves. It requires a dedicated e-commerce purchase process and analytics, which can be based on some traditional e-commerce engines expanded by a dedicated theme or a free plugin. Options for this are available, but limited. It’s good to consider a dedicated e-commerce website and mobile app, especially when the product and brand require a dedicated approach regarding their configuration and user experience.

If you want to know, how to outsource an application to a technology partner, check it out here!

right arrowHiring Developers For Your Startup - When And How To Transition From Outsourced To In-house

A notebook showing a statistics and a heading: Personal insights
Customers want to have a personal insight into all of their subscriptions, so they'd be able to plan their personal budgets

Online subscription management

Whether you decide to sell digital products or physical goods, subscribers must be able to manage their subscriptions transparently and easily. Customers need to have clear information about payment plans, payment histories, and product deliveries. Managing customer and user experience is more important in subscription products than in traditional ones. When you lose one client because of failed payments you lose much more than just one purchase.

Managing cancellations is crucial as it should be easy enough for users to feel safe and at the same time not encourage them to cancel. Generally, managing the churn rate will become an important part of your business strategy after launching your subscription model.

All of this can be done through a dedicated subscription management panel for your customers and a dedicated mobile app. Those are great places for upsells, loyalty programs or product personalization.

You can find more information about mobile app development in our article.

right arrowHow To Smartly Outsource Mobile App Development in 2024

A female writing on sticky notes
A careful planning is required while implementing a subscription business model, but with clear insight you can be successful

Is the subscription business model for me?

Converting your existing physical product to a subscription service takes time and effort, but it could be worth it. Plenty of products still aren't available this way, and it offers something new and fresh that could make your business bloom.

Remember that building this kind of service requires a great understanding of the needs and habits of your customers as well as a lot of creativity. When a product becomes a service, aspects such as branding and digital tools become extremely important elements of your business strategy.

With a good partner in technology and digital product marketing, you can responsibly plan and transition your business to start successfully selling physical product subscriptions.

Memory Squared

Memory Squared - Design Driven Software House
Memory Squared - Design Driven Software House

At Memory Squared we connect humans and computers by creating digital products that meet real needs and inspire genuine emotions and interactions. We would love to share our story and experience with You.

They can provide a great extension for startups' development and design teams. Working for GitLive they were very engaged and put a lot of effort into improving our product.
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Trusted by both innovative startups and large international companies.

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