The Promising Subscription Industry & How to Get Started In It

The Promising Subscription Industry & How to Get Started In It

Daniel Hall 02/11/2022
The Promising Subscription Industry & How to Get Started In It

Subscription-based services have become significantly more prevalent in this decade. 

From access to exclusive content to restocking your necessary clothing items, the subscription-based industry has it all. While more types of subscriptions are popping up every day catering to different markets, it’s safe to say that this business style isn’t going anywhere.

What’s even more appealing about getting started in the subscription industry is that it’s tapping into an all-encompassing market. Do you want niche gaming items? There’s a subscription for that. What about healthy snacks for your dog? There’s a subscription for that. How about a way to learn magic tricks so that you become the life of the party? No guarantee that you’ll become any cooler, but there is a subscription box for that too.

The Stats Pointing to the Promise of the Continuity Industry

More people are now willing to sign up for subscription services as their popularity has grown. According to this 2018 article published by McKinsey & Company, the biggest retailers in the subscription e-commerce industry raked in over $2.6 billion in 2016. On a grand scale, this doesn’t seem impressive but consider that just five years earlier the industry only made around $57 million. With no intention to slow, the growth has been over 100% every year since 2011.

The people most likely to sign up for subscription eCommerce businesses are between the ages of 25 and 44, making from $50,000 to $100,000 per year. In other words, e-commerce subscribers have disposable income and possess a need that recurring products or services fulfill.

It is also worth pointing out that a large portion of subscribers has more than one active subscription going. The median figure for ongoing subscriptions of an active subscriber has stood at two, but over 30% of this group has 3 or more. This proposes an interesting phenomenon that when subscriptions make ordering easier, consumers prefer to duplicate that ease into other aspects of their life.

Risks of Subscription eCommerce for the Business Owner

There is no denying that there is risk involved in the continuity industry. Customer churn is a huge issue without an easy fix. Even if you manage to get a lot of people onboard one month, there is no guarantee that they will turn into regular subscribers. This is mostly due to direct competition and your box’s perceived ongoing value. Around 40 percent of subscribers cancel their account within the first 6 months, which is obviously not an encouraging statistic to see for those getting started in the subscription industry.

Crucially though, the companies capable of providing long-term quality products and services have shown that they can keep their customers. Customers who sign up for services that specialize in providing specific products are more willing to stay long-term. As many as 45% of subscribers to those niche services stay on for at least a year. There are also decline recovery procedures that you can implement to help with customer churn.

The subscription industry is certainly not one without risk, but if you have a product or service that fulfills a need, you can make an almost immediate profit and enjoy quick growth.

How to Get Your Subscription Business Off the Ground

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Getting started in the subscription industry as a startup is not an easy task. You can’t just wing it at every step of the way and expect the thriving industry to do the work for you. Hard word, planning, and a detailed understanding of your offerings and customer base will make a world of difference in the first months and years of operation.

Included below are some tips for you to keep in mind as you map out the road to success for your continuity-based business.

1. Bring Something New to the Table

Though the subscription industry is just getting started, a lot of players are heavily invested in it. There’s a decent chance that whatever you’re planning on offering, someone has already done.

That doesn’t have to stop you from pursuing your idea, however. It simply means that a more inventive approach is required.

Take the time to carefully research the segment of the subscription industry you’re thinking about entering and see what the competitors there are currently offering. You’re not setting yourself up for success if you just intend to follow in the footsteps of companies that are already more established than you are. Even if you are confident that you have the better product or service, customers are not likely to abandon the company they already know.

The bottom line is that you can’t afford to blend in with your competitors. You have to stand out.

2. Don’t Overcomplicate the Pricing

Pricing is hugely important to the success of your subscription-based business, especially when growing and scaling. Once again, you have to do your research here to see what others in your field are offering. And unless you are offering a much higher quality product, it’s best to stay comparable or lower than those competitors.

Cratejoy, a leading resource for subscriptions, states that most businesses in the continuity industry should try to abide by a 30% margin when pricing their services.

If you have the ability to, try out a tiered pricing structure for your subscribers. According to enterprise software company Zuora, it’s best for startup subscription companies to offer two or three pricing tiers in the beginning. This way, consumers stay in control of their spending and tend to stay subscribed longer.

3. Make Payment Processing Easy

Now that you’ve figured out your selling point and pricing strategy, you can turn your attention to improving customer experience. One of the biggest indicators of a reputable subscription business is the safety and efficiency of recurring payment processing.

To accomplish this, you will need a subscription merchant account, but securing one may be more challenging than you think.

How You Can Secure Subscription Credit Card Processing


Considering the fact that all of your e-commerce customers will be paying for your products or services using their credit or debit card, it is crucial for you to have a merchant account up and running.

Continuity subscriptions are in the high risk category because of their payment structure. So, unfortunately, not all merchant account providers and acquiring banks are willing or able to handle these companies. Perceptions of fraud and high chargebacks by these entities leave subscription-based companies vulnerable.

This is where a hard-to-place provider comes in. By offering an online payment gateway and backend integration structures for subscription-style merchants, they allow businesses to grow and scale effectively. With chargeback and fraud protection built-in, your risk in the business decreases exponentially. Take the time to find the best high risk merchant account for your business type.

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Daniel Hall

Business Expert

Daniel Hall is an experienced digital marketer, author and world traveller. He spends a lot of his free time flipping through books and learning about a plethora of topics.

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