The advent of technology and the boom in eCommerce have completely transformed the FMCG (Fast-Moving Consumer Goods) sector. Today, subscription models and recurring purchases have become a powerful tool that is driving customer loyalty and creating predictable revenue streams for businesses. Whether it's a monthly delivery of groceries from Amazon Pantry or a quarterly replenishment of skincare products from Dollar Shave Club, subscription models are not a fleeting trend, but a long-term eCommerce strategy.
The Power of Recurring Purchases and Subscription Models
Recurring purchases and subscriptions allow customers to receive products or services at a frequency that suits their needs, hence encouraging repeat purchases. However, it extends beyond just the transactional aspect. When customers sign up for a subscription, they make a long-term commitment which closely mirrors their loyalty towards the brand.
Subscription models can be categorized into three types, each suiting a different purchasing behavior:
Replenishment subscriptions offer the convenience of automatic, recurring delivery of products that customers use on a regular basis. Think of grooming products from Gillette On Demand, or pet food from Petco's Repeat Delivery.
Curation subscriptions offer a personalized selection of items delivered to the customer's doorstep, like a mystery box. This model is popular among retailers like Ipsy for beauty products, or Stitch Fix for apparel.
The Impact on the FMCG Sector
Numerous organizations have successfully integrated subscription models into their eCommerce strategy. According to a report by McKinsey & Company, the subscription e-commerce market has grown by more than 100% percent a year over the past five years.
A great example here would be Blue Apron. They transformed the way people shop for and prepare their meals through a subscription-based model. Another company, The Honest Company, offers a flexible subscription model for organic baby and beauty products suited to the customer's schedule and product preferences.
Recurring purchases and subscription models are reshaping the eCommerce landscape in the FMCG sector. In order to fully leverage this trend, it is paramount for businesses to focus on customer experience, offer high-quality products, and imbue their branding in every product or service they provide.