Unpacking The Subscription Economy (Series) – 8. The Consumables Subscription Model
This series of articles follows on from an article I published recently, titled “Unpacking The Subscription Economy”, where I mentioned that subscription businesses are more valuable and appealing to investors than traditional businesses, because they are more predictable to operate and they extend the lifetime value of a customer. This article looks at The Consumables Subscription Model.
The Consumables Subscription Model
The Consumables Subscription Model involves offering a subscription to a product that the customer needs to replenish on a regular basis. The value proposition is simple: life is too short to worry about mundane tasks like remembering to pick up diapers or razor blades; subscribe and you’ll never run out.
The model works best when there is no inherent enjoyment in shopping for what you sell. Consumables subscription models have been set up for products as varied as razor blades, diapers, dog food and toner cartridges.
The Big Box “e-tailers” (e.g. Amazon, Target) have started to offer subscriptions for many of their consumable products, so be sure to identify ways you can differentiate your offering against the scale of Amazon and other giants.
Who This Model Works Best For
Consider The Consumables Subscription Model if you have:
- Something to sell consumers that naturally runs out.
- Something to offer that is annoying to replenish.
What The Insiders Say
- To compete with Amazon and the other Big Box e-tailers, you need to brand what you sell as your own. Name the product yourself even if you’re buying it from a supplier.
- Because big etailers can win on clinical points like price, delivery speed and breadth of product, you need to give customers a different reason to choose you. Invite customers to fall in love with your brand through the experience you provide. (Amazon also offers Subscribe & Save on virtually all of its consumable products, which is the equivalent of saying almost all consumable products are now available via an Amazon subscription.)
- Ensure you have a steady flow of supply. Either take control of the manufacturing process or ensure you can find enough supply when you need it.
- Don’t underestimate the logistical challenge of fulfilling a physical product or service for thousands of subscribers.
Recurring Revenue is one of the “8 Key Drivers Of Company Value” from the Value Builder System™️, which I use to help small business owners increase the overall value of their businesses.
Being able to cash out the maximum when the time is right, is every business owners dream. It’s the dream of having a long and happy retirement, without financial worries, and being rewarded for all the hard work they put in over the years. But so many fail to get this right, because they never formally worked towards that goal, they thought it would just happen.
So if you’re a business owner who’s planning ahead and considering ways to exit your business on your terms, I hope the information I provide in the coming weeks will help you reach those goals. If you would like to chat to me about this in person, feel free to book a slot in my calendar and we can discuss it further.
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