Index – Economy – Hungary subscribes: this is how subscription e-commerce changes our lives

A few years ago, it would have been unthinkable not to buy our favorite band’s album on CD or our favorite movie on DVD, but to pay a monthly fee to certain service providers in order to be able to access them at any time. With the subscription, music and movie streaming services have turned the industry on its head. Business solutions similar to this can radically transform the world of e-commerce as we know it today.

Personalized offers

More and more people around the world want not to find the products for them themselves, but for online stores to surprise them with what they want. And this is an increasingly large business: according to data from The Business Research Company, subscription e-commerce is expected to handle a turnover of 330 billion dollars globally in 2024, and a 66 percent expansion is expected in a single year.

More and more online stores are introducing subscription packages in Hungary as well. Among other things, there are surprise packages composed of branded cosmetics, a pet food package, or inspirational ideas created for parents, with which they can come up with active programs for their children.

Few people in Hungary have yet recognized the potential of subscription e-commerce. Those who are among the first to introduce such a service in their market can gain a significant competitive advantage

– pointed out Attila Stampf, co-founder of Humanize, which deals with customer experience-based developments.

According to surveys, 59 percent of consumers choose subscriptions for convenience. They save the time spent on selecting products, it is much more convenient and more predictable. Exclusivity is an important aspect: many brands offer subscribers unique products and favorable offers. People prefer to become loyal customers of specialized web retailers with specialist knowledge.

It works like this

While in the past it was mostly typical of gym passes and streaming services like Netflix, subscription e-commerce is now booming in more and more industries.

In terms of customer experience, the product subscription service means more than a recurring transaction. Customers are charged a recurring fee – usually monthly – in exchange for access to a product or service. An e-commerce subscription is essentially about a strong customer relationship as well as a seamless customer experience.

But how can customers subscribe and for how long? Can the amount be changed, and what happens if someone does not buy the frame or, on the contrary, orders for an amount that exceeds it?

It depends on the subscription model used in the online store, according to which structure the subscription to the product and/or service can be subscribed to – one of the leading Hungarian rental web store system development companies, Shoprenter, responded to Index’s inquiry, with a solution enabling this already available.

We can usually talk about monthly fees, but weekly, biweekly, bimonthly, quarterly, half-yearly, or even annual subscriptions are not uncommon. The duration of the subscription may vary by online store, including by product range.

in addition, a one-time basket containing other products can be added to the purchase, but the online store must indicate this. The amount of the subscription is deducted from the bank card when the order is placed or when it is renewed.

In subscription e-commerce, we distinguish between three main types, but combinations of these can also occur in individual web stores:

• Product subscriptions (Subscribe and Save model): Allows customers to conveniently access everyday things that they need to recharge regularly. This model can easily ensure high customer retention, but results in a lower profit rate. A well-functioning model, for example, in the FMCG sector (Fast Moving Consumer Goods).
• Curator subscriptions (Mystery box model): Subscribers receive pre-assembled “boxes” at regular intervals, which usually contain a package of products organized around a specific theme. We can find many examples of this in the FMCG sector, but we don’t have to search the Internet for a long time in the field of clothing, electronics, toys and gifts, sports, DIY, and home furnishings.
• Access subscriptions (Membership Club model): Subscribers purchase access to content and benefits, such as closed content, discounts, and thus exclusive products. These include digital products and software (for example: Netflix, Forbes), but also an event or community membership.

The subscription can be used not only for consumer durables, but also for grocery shopping, which is already an example in Hungary. It is also possible for the customer to put together a basket himself.

Regular customers get better prices

Subscription e-commerce has many advantages for merchants. One of the most important things is that sales revenue will be more predictable and stable. Since the company is in regular contact with customers, instead of paid advertisements, they reach consumers with their offers directly from their own newsletters or from the website. According to a research published in the Harvard Business Review, keeping an existing customer costs at least five times and up to twenty-five times less than acquiring a new one.

In the case of regular purchases, logistics can also be organized more efficiently. Home delivery becomes more predictable, and logistics partners can provide better rates. All this enables a significant cost reduction, which the traders share with their customers, so both parties benefit.

Web retailers do not need a significant investment to be able to offer subscription e-commerce solutions. “The subscription e-commerce model means more loyal customers, fewer product returns and more predictable sales revenue for retailers. Customers’ satisfaction is shown by the fact that they often keep the subscription for years,” said Máté Rab, Shoprenter’s managing director.

In many cases, the payment during one-time online card purchases cannot yet provide the same experience as the touch payment in the physical space, just think of entering the card number or the two-factor identification. In the subscription system, payment is convenient and takes place almost imperceptibly, since predetermined amounts can be securely deducted from registered cards, which are the most secure thanks to tokenization, without any further intervention.

The benefit of subscription e-commerce cannot be neglected at the social level either. In addition to offering benefits to consumers and retailers, it also contributes to sustainability.

In addition, the subscription model can also help support local economies, as consumers can often choose local products and services as part of their subscription, thus strengthening local communities and economies.

(Cover photo: Artur Widak / NurPhoto / Getty Images)