Subscription ecommerce
What is subscription ecommerce?
Subscription ecommerce is selling on a repeat payment: the customer pays every month, or on every delivery, and keeps receiving the product until they stop it. The shop holds a mandate for the repeat charge, issues a document for each period, and states plainly when the next charge falls and how to end it. Revenue becomes predictable, and retention is what holds it up: every subscriber lost is missing next month too.
Example
A coffee shop sells a subscription: one kilogram a month for €24. With 300 subscribers the monthly revenue is €7,200, and it is known in advance — rare in retail.
Churn decides the rest. At 6 per cent a month, 18 subscribers leave, so growth means winning more than 18 new ones every month. The average stay at that rate is about 17 months (1 divided by 0.06), which is roughly €400 per subscriber — the figure to set against the cost of winning them, known as lifetime value.
Bring churn down to 4 per cent and the stay becomes 25 months, or about €600 per subscriber. The same advertising is suddenly cheaper without a single change to it. The amounts are illustrative.
Why it matters for a business
A subscription changes three things at once: cash flow can be planned, stock is bought against known quantities, and service becomes continuous rather than a one-off. The demands change with it — cards expire, deliveries get skipped, addresses move.
The technical side rests on a mandate for the repeat charge: the customer authenticates the first payment, and later charges run on a token held by the payment provider. Card details stay with the payment provider rather than in the shop, which keeps most of the PCI DSS burden there as well.
The legal and accounting side wants the same clarity: which document is issued for each period, how a price change is announced, and how the customer ends the subscription — with a button in their account, not an email to you. A subscription is a layer on top of an ordinary shop; the catalogue, basket and payment stay as they are in online store development.
What to ask
- Can the customer pause, skip or cancel on their own, without writing to anyone?
- What happens when a card is declined — how many retries, what message, when does the subscription stop?
- Where is the payment mandate held, and can it move to another provider?
- Which document is issued for each period, and how does it reach the customer?
- How is the price changed for existing subscribers, and how are they told beforehand?