Why do eCommerce Brands Launch Subscription Plans?
Before I begin to discuss anything on the more prominent eCommerce brands coming up with various subscription plans, I have observed one thing – “Subscription business model is in trend these days among the bigger eCommerce brands.”
The Initiator – Amazon
It was 2005 when Amazon Prime was founded first in the United States, and it was launched in India in the year 2016, says Wikipedia. It means it is on the market for 13 years, but in India, it is for two years. And, now Amazon Prime has 100 million members.
The Challenger – Flipkart
And, in the early morning of August’s first day that Flipkart is all set to compete with Amazon Prime with its new programme, Flipkart Plus. Surprisingly, Flipkart Plus won’t charge anything from the user, so there is no subscription here. They call it a points-based plan.
The Niche player – Zomato
I don’t know whether Zomato was inspired by Amazon for its subscription services or not, but it launched the paid subscription services, Zomato Gold, for its customers in UAE & Portugal first at the beginning of the year 2017.
Now, Zomato Gold is available in the various cities of India and getting a great response. But, Zomato inspired its close competitor, Swiggy, to come up with a paid subscription service in the year 2018.
But, I was wondering, what are these brands up to? Is this something to offering an excellent customer experience? Or is this something else?
Let’s check out the reasons why these leading eCommerce brands are coming up with such paid or unpaid subscription services:
1. Better customer experience
In no way that I can disagree on this point.
The leading eCommerce brands are coming up with such services to offer unique and everlasting customer experience.
With Amazon Prime subscription, you can get access to Amazon Video, Amazon Music, and much more. In fact, Amazon Prime members get the benefit of one or two-day delivery options.
Just in a way, if we talk about Zomato Gold, the members get one higher-rated item utterly complimentary on the bill every time they unlock any of the restaurants listed in the app. And, this benefit is available all across the cities wherever Zomato Gold is available.
Swiggy is doing the similar thing of adding more benefits and expanding the services that they’re already offering.
But, Flipkart Plus, being a no-fee subscription service, they are planning to partner with Hotstar, Zomato, MakeMyTrip, and Café Coffee Day. So, while you buy products from Flipkart, you can earn some points. For example, with enough of Flipkart Plus points, you can earn a subscription of Hotstar as well.
With these kinds of services, yes, they are working harder each day to improve the customer experience, they are already serving.
And, this was rightly said – “Customers remain loyal to you not because of your products, but based on the experience that you’d offered.”
And, this is why they are leading the eCommerce industry into their own segment.
2. Outperform competition
Like, this is true.
Amazon started Amazon Prime 13 years ago, and by now, it has more than 100 million members.
But, my first day of August saw this-
Looking at the success of Amazon Prime, Flipkart initially came up with the Flipkart First. But, after its failure, this eCommerce brand is all set to come back with a bang with Flipkart Plus.
Same is the case with Swiggy. Soon after looking at the success of Zomato Gold, Swiggy launched Swiggy Super to give a tight competition to its opponent.
Because, as per the sources- by the Q1 of FY18, 60% of Zomato’s revenue was generated by the mix of subscription-based and food delivery services.
So, why not Swiggy to take a chance on this.
3. Loyalty Programs or Addiction Programs?
I think they are Addiction Programs. They make users impulsive and sticky, this is right.
With such subscription-based services, there is a human behavior attached. For instance, if I have bought a subscription to Amazon Prime, I become addicted to buying things from Amazon because they offer me 1-day delivery.
Okay, let me give you another option, I have downloaded both- Swiggy app and Zomato app. But, I am a member of Zomato Gold. So, there is no other option when I go to restaurants and use Zomato for ordering the food because I am getting the benefits.
In fact, if I have to order it for home deliveries or if I wish to eat anything, I would only choose Zomato, because not just that I like its services, but I have paid them.
What will happen with Flipkart Plus? If I buy products from Flipkart, I will buy more and more to add the points to my account which will then allow me to encash it from MMT, CCD or any of their partners.
Such subscription plans by the eCommerce brands are making us habituated with their services which they call it as, “Loyalty Programs”.
The success of any business lies in having loyal customers. And, this is what our leading eCommerce brands are winning at. These subscription-based models have proved to be highly successful these days for most of the marketplaces. And, I believe, more and more e-retailers will consider this strategy in the coming years to be highly productive and successful.