Why Retailers Are Turning to Subscriptions

Consumer behaviour has changed significantly in recent years, impacting retail economics. It’s becoming more difficult than ever to maintain profits through one-off sales alone.

This section explores some of the reasons why launching a subscription service helps turn these challenges into opportunities.

Existing infrastructure makes it easier to get started

Unlike DTC startups, most retailers already have the infrastructure needed to support subscriptions; they just haven’t applied it to a recurring model yet.

With established supply chains, warehousing, fulfillment operations, and customer data, retailers are in a strong position to layer on a subscription offering without reinventing their business.

Creates direct relationships with customers

The standard retail transaction doesn’t involve much relationship building. Usually, the customer enters the shop, finds what they want, buys it, and leaves.

Subscriptions, on the other hand, are all about relationship building. Customers are often happy to give you lots of information about themselves and their preferences so you can personalize and optimize their experience.

The consumer is then exposed to your brand regularly through your packaging, thank you emails, customer satisfaction surveys, and renewal messages.

Declining brand loyalty and rising acquisition costs

Winning and keeping customers is becoming more difficult. Paid customer acquisition cost (CAC) for retail rose 7% YoY in 2024, reaching an average of $226 per new customer.

At the same time, customer loyalty is declining. Between 2022 and 2023, the number of people in the US loyal to one brand or more fell from 79% in 2022 to 68% in 2023.

Subscriptions help offset this. By converting one-off or occasional shoppers into subscribers, retailers can build longer-term relationships and increase customer lifetime value (CLV).

The rise of convenience-first buying habits

The rise of online shopping means consumers increasingly value ease and speed.

Subscriptions give them that; they buy something once, and it arrives at their door regularly. More than 22% of consumers cite convenience as their top reason for subscribing, and across all categories, people are willing to pay around 5% extra for convenience in retail interactions.

Predictable revenue

Subscriptions offer recurring income that supports smarter financial planning and helps businesses weather market fluctuations.

Subscriptions also give retailers more data. Think metrics like Monthly Recurring Revenue (MRR) and churn rates. This enables them to measure financial health and make more informed decisions regarding marketing, expansion, or stock investments.

Smarter inventory planning

Since subscription orders arrive on a predictable schedule, retailers can forecast stock needs more accurately, reducing excess inventory and ensuring they don’t run out.

Many subscription management and fulfillment platforms include demand forecasting and inventory levels optimization tools to help retailers balance this.

How to Get Started With Retail Subscriptions

Now you know why subscriptions are critical for retailers and the challenges in launching them. This section provides actionable steps on how you can launch your first subscription.

1. Assess which product lines suit subscriptions

Start by identifying products or services with repeat purchase potential or high engagement value. You can identify the right products by asking yourself:

• Do customers buy this regularly?
• Is there value in curating or bundling this product?
• Can you create a meaningful loyalty experience?

For example, a high-ticket one-off purchase like an integrated vinyl stereo system probably wouldn’t require a subscription.

However, you might offer customers a regular delivery of curated vinyl records tailored to their musical taste to play on their stereo.

Examining transaction data, customer feedback, and product margins can help determine what makes a good subscription.

For example, if people regularly buy two products together, you could offer them as a discounted bundle on subscription.

2. Define your subscription value proposition

Decide what customers will get and why they would subscribe instead of buying on demand.

You also need to make sure your business gets value out of it. Selling subscriptions at a discount might attract more customers, but if you lose money overall, then it may not be worth it.

Pricing needs to reflect perceived value, not just discounts.

Decide on factors like:

• How often will you bill customers? Monthly, quarterly, annually?
• Will you have tiered pricing or a single offering?
• How will you use trials, introductory offers, or bundling to incentivize customers and derisk signing up?

3. Align internal systems and operations

This is likely to be the trickiest part of setting up new retail subscription services. You’ll need to make sure everything behind the scenes is set up to handle subscriptions.

There are three main areas to consider here:

Inventory management: You need systems that can track recurring demand and hold enough inventory to cover upcoming shipments. You’ll need systems to accurately forecast stock and real-time stock alerts to warn you of issues like missed deliveries.

Fulfillment workflows: You’ll need clear cutoff dates for billing, packing, and shipping. You’ll then need to build your internal systems around those timelines. For example, if you’re selling curated boxes, you’ll need systems for batch-picking, printing shipping labels and creating and assembling custom packaging. You’ll also need a reliable logistics partner that turns up on time every subscription cycle.

Customer service readiness: As mentioned earlier, the number of customer service inquiries you receive is likely to increase, so make sure you prepare for this.

Some ways to do this include:

• Train your staff to deal with subscription-related inquiries like skipping a delivery, canceling, and renewals.
• Use online FAQs and automated chatbots to reduce call center load and help customers to self-serve.
• Monitor subscription customer support data separately to ensure you satisfy customers and deal with their inquiries efficiently

4. Choose the right technology stack

If you’re an established retailer, you probably already have an eCommerce platform.

But selling subscriptions isn’t the same as selling products once. It introduces new technical demands, and most general-purpose platforms aren’t designed to handle them.

Subscriptions require systems that can manage:

• Recurring payments and automatic billing
• Renewal logic across different cycles (e.g. monthly, quarterly)
• Flexible customer options like pausing, skipping, or switching plans
• Churn prevention tools, dunning flows, and subscription analytics

Platforms like Shopify or BigCommerce aren’t built for subscriptions out of the box and instead rely on third-party plugins or custom-built workarounds.

This leads to:

• Poor integration between your store and your subscription data
• Limited control over how subscriptions behave
• Friction in the customer experience, especially when users want to manage or edit their plan
• Compatibility issues when plugins update or break

As you gain more subscribers, you’ll quickly find these platforms generate more admin for you, making it difficult to scale and frustrating for subscribers.

Larger retailers could build their own platform to get around these issues, but this is expensive, time-consuming, and likely to involve significant trial and error.

A simpler alternative is to use a platform that was built for subscriptions from day one, like Subbly.

5. Prepare your retention strategy

Many retailers focus heavily on the launch offer or sign-up flow, but fail to plan for what happens next.

Acquiring subscribers is only half of the subscription model. The real value comes from keeping customers engaged over time, and that requires having a clear retention plan.

Unless you engage regularly with customers and add and reinforce value, even happy customers may cancel.

Here’s what to consider in your retention strategy:

Onboarding journeys: Ensure your onboarding process sets subscriber expectations early, explains how to get value out of their subscription, and where to manage customer preferences. This sets the tone for the relationship and builds trust early.

For example, if a customer isn’t told when to expect their first delivery and it takes longer than they expect, they may get frustrated waiting and cancel.

Mid-cycle engagement: Keep subscribers informed and interested between deliveries. This could include sneak peeks, add-on offers, surveys, or tips for using the product.

Below is a good example from the flower subscription service Appleyard London. This encourages subscribers to spend more while also enjoying better value for money.

Flexible account management: Giving customers easy ways to pause, skip, or adjust their subscription reduces frustration and lowers the risk of cancellation.

Win-back flows: Set up automated reminders or offers for subscribers who show signs of disengaging or who have recently cancelled. A small incentive or personal message can often bring them back.

For example, if they offer a free trial and people don’t convert to full subscribers, then you could offer to extend the trial period.

Here’s an example of what a trial extension email could look like for an SaaS:

6. Track the right metrics to improve retention

Building a strong subscription offering involves understanding how long customers stay, when they’re most likely to cancel, and what drives long-term value.

By monitoring metrics regularly, you can spot patterns early and make informed decisions on pricing, onboarding, and marketing. Over time, small improvements to retention can drive significant growth in revenue.

Key metrics to track include:

Churn rate: The percentage of subscribers who cancel during a given time period. A rising churn rate is a sign your subscriptions aren’t delivering value.

Customer lifetime value (CLV): The total revenue you expect from each subscriber while they are a customer with you. Higher CLV means better ROI from your acquisition spend.

Cohort retention: Tracking how different groups of customers behave over time (e.g. people who signed up during a specific promotion). This helps you see what strategies are working and what isn’t.

Active subscriber rate: The number of paying subscribers who are still engaged with your product (e.g., not skipping every cycle). This gives a clearer view of real engagement, not just billing.