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Digital subscriptions unlocking as a new sales source for your store

Learn how to set up a profitable digital subscription business on Shopify from the experts at Sky Pilot.

4 Minutes, 12 Seconds

What do Dollar Shave Club, Apple TV, Amazon, and Financial Times have in common?

They are all digital subscription-based businesses.

And what’s not common between them?

Well, they all belong to different industries—men’s grooming, movie streaming, eCommerce, and new publications.

According to McKinsey & Co., the digital subscription industry has grown more than 100% over the past five years. And going by current statistics, the industry is thriving, with new players, both individual creators and brands, entering the market every day.

There is obviously something that's working for brands offering digital subscriptions. In this article, we look deeper into why digital subscriptions are the way ahead for eCommerce businesses. 

What are digital subscriptions?

Digital subscriptions are a way for companies to offer a variety of services on a recurring basis. For many companies, digital subscriptions can be an additional source of income. Companies charge a fee for services, typically paid monthly, quarterly, or annually.  

For consumers, digital subscriptions are an easy and cost-effective way to access online services. They make it simple for customers to subscribe to a variety of digital platforms, including streaming services, news sources, delivery services, software programs, and more. Individuals who subscribe get unique access to premium services, benefits, and content generally inaccessible to non-subscribers. All this is provided against recurring payment options. 

To name a few, Netflix, Amazon Prime Video, Spotify, and Apple TV, are some of the most popular digital subscriptions. Digital subscriptions are now an essential part of the digital age, giving users a simple and quick method to access a wide range of content and services. 

Digital subscriptions: Facts and figures

The following statistics, facts, and figures will give a perspective on the popularity and potential of digital subscriptions.

  • According to McKinsey & Co., 46% of consumers have subscribed to online streaming services and 15% to eCommerce subscriptions
  • The digital subscriptions market is expected to grow to $ 1.5T by 2025
  • The US consumes 53% of all digital subscriptions
  • The average number of subscriptions subscribed by millennials is 17
  • Physical products represent 45% of the subscription market value

Take a look at predictions in the digital subscriptions market. 


What type of products can brands sell via digital subscriptions?

Brands have an option to sell a variety of products and services via digital subscriptions. Let’s consider some popular types:

Media and entertainment, for example, streaming TV series and movies, and music. News publications have adopted digital subscriptions as well, offering content, stories, and articles. Whether you’re an individual creator or a company, you can create digital subscriptions of content such as music, movies, news publication, magazines, newsletters, audio books, radio, podcasts, etc.

Software companies provide digital tools across categories to cater to different customer segments, B2B and B2C, for example, SaaS (software as a service) tools, online platforms used for design, productivity, performance tracking, remote working, etc. The global SaaS market is worth $152 billion and growing.

E-commerce brands, too, provide curated subscription boxes that are delivered to customers' doorsteps. For example, from food to beauty to fashion to grocery, subscription options cater to customers' preferences and interests. In addition, eCommerce brands can create digital subscriptions such as newsletters, magazines, podcasts, etc., for which they can charge fees and provide regular content related to their products. 

Education and learning via courses, tutorials, and educational resources are provided via online learning sites. Think Coursera and LinkedIn Learning—digital subscriptions have changed how we learn and educate. Digital subscriptions offer a wide variety of educational options that cater to different interests and aims, from specialized courses to professional development programs. 

Additionally, interactive elements like quizzes, forums, and personalized assessments are frequently packaged with digital subscriptions to make learning more interesting and immersive. 

Fitness and wellness is another industry that provides digital subscriptions, such as workout plans, personalized training sessions, dietary guidance, and health advice. Subscribers can access health content like diet programs, meditation sessions, and guided exercises from the comfort of their homes. 

In addition, these could also include healthy diet plans and meal boxes. Additionally, to improve the overall user experience, several fitness and wellness platforms offer interactive elements like progress monitoring, community support, and professional advice. 

Communities: Another popular digital subscription vertical is online communities. Every industry could have online communities, for example, communities for photographers, style and fashion, mothers, start-up founders, etc. There’s no limit to creating communities narrowed down to different people based on demographics, interests, professions, etc.

Besides mainstream and popular digital subscriptions, there is also a market for off-beat and unique digital subscriptions that cater to specific interests. For example, board game lovers can subscribe to services that give access to new games, limited-edition games, and exclusive benefits. 


Why consider digital subscriptions for your businesses: the benefits and advantages

Digital subscriptions provide a wide range of benefits to businesses. 

Steady income

Digital subscriptions, as opposed to one-time purchase, provide businesses with steady, recurring income, offering financial stability. This helps companies scale faster, invest in product/service development, and plan their business future easily. For example, consider the case of Amazon Prime—the digital subscription model helped the e-commerce brand become a trillion-dollar company.

Higher customer loyalty

Subscriptions help foster a sense of community and value among subscribers, as they receive special benefits. Subscribers have a stronger sense of ownership over the brand and are more inclined to stick with it over time. Digital subscriptions also promote continuous customer connection and communication, enabling businesses to obtain insightful feedback, comprehend customer preferences, and adjust their services accordingly.

Offer personalized experiences

Businesses can learn more about their customers' behavior, preferences, and usage patterns by using subscriber data and analytics. Companies can improve the experience by delivering personalized recommendations, targeted promotions, and customized content thanks to this data-driven strategy. 

Businesses can increase customer satisfaction and retention by customizing their services to each client's needs and interests. One of the best examples of offering hyper-personalized features is Spotify—the brand dominates the music streaming industry by collecting data and using AI (artificial intelligence) and ML (machine learning) to generate personalized features for subscribers. 

Adapt and evolve

With digital subscriptions, businesses can innovate and adapt to changing ecosystems quickly. Brands can remain flexible and responsive to market demands as they have the freedom to change subscription tiers, add new products, or test out different price structures. This adaptability enables companies to test and improve their products, ensuring they stay competitive and relevant in a constantly changing digital market.

Collect insightful data

Data collected from subscribers can be a goldmine for businesses, provided it is analyzed and used to achieve future goals. For instance, companies can collect data about subscriber behavior, preferences, engagement patterns, purchases, content consumption patterns, feedback, and how they respond to personalized recommendations. Data collected can be utilized to plan product development, content creation, marketing campaigns, customer segmentation, etc. 

Competitive advantage

Digital subscriptions allow companies to set themselves apart from competitors in an environment where eCommerce is becoming increasingly competitive. By offering subscription-based services, eCommerce businesses can differentiate themselves by providing exclusive advantages, first access to products/services, or the best customer service. Customers that value improved experiences and exclusivity offered by digital subscriptions tend to be more loyal in the long run.

How do digital subscriptions help reduce costs and increase profit? 

Digital subscriptions can help businesses reduce costs in a number of different ways—for example, eliminating costs associated with physical manufacturing and distribution, easing administrative procedures, improving inventory control, enabling targeted marketing, and encouraging customer retention. Let us understand in detail how digital subscriptions help cut costs.

  • Save on production cost: By shifting from physical products to digital subscriptions, businesses can cut costs related to production and distribution. These would include manufacturing, packaging, shipping, materials, storage, and transportation, among others. 
  • Minimize administrative overheads: Companies can reduce the need for human invoicing, paper-based transactions, and related administrative activities by implementing automated billing and payment systems. These savings in operational expenses and staffing requirements enable businesses to utilize their resources more wisely for business growth.
  • Minimize physical inventory-related costs: Digital subscriptions also allow companies to improve their inventory control. Digital subscriptions function on a digital platform, negating the need for physical inventory. This eliminates a need for inventory management, storage space, and the potential loss of goods owing to unsold inventory. As a result, firms can save money by avoiding the costs of warehousing, stock management, and inventory write-offs.
  • Reduction in marketing budgets: Digital subscriptions also make it easier to implement targeted marketing strategies. This can be more economical than using conventional advertising techniques. Businesses can identify their target demographic and develop tailored marketing efforts by using customer data and analytics. Companies can make the most of their marketing budgets by concentrating their efforts on customers who are more likely to subscribe and by reducing the amount of time and money they spend on uninterested audiences.
  • Improve profit via customer retention: Improve profit via customer retention: Digital subscriptions lead to customer retention, which is less expensive than attracting new clients. Businesses can boost customer loyalty and lower churn rates by providing subscribers value-added content, unique services, or discounted pricing. By using this retention approach, companies can avoid the costs of gaining new consumers, such as marketing, advertising, and promotional activities.

How to start a digital subscription for your Shopify business?

If you're considering launching a digital subscription for your Shopify store, you're late to the party, but again, it's never too late to start. Your first step should be to decide on the product/ service you'll offer via digital subscriptions. To have a competitive advantage, you must create a unique digital subscription. 

One of the most critical steps to starting digital subscriptions is choosing the right tools to enable a seamless shopping experience for your audience. This is where the integration between Sky Pilot and Appstle Subscriptions comes into play. While the former will take care helping you sell and deliver music, videos, books and other digital files, and track the downloads closely, the latter looks into setting up an easy way for customers to buy them in a recurring manner, helping your business grow through repeat purchases!

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