The rise and rise of subscription commerce

Forty nine-year old US returned Dipesh Dutt is busy baking a new enterprise. Next month, the former corporate executive will launch The Enthu Bakers, a subscription based e-commerce venture that will deliver bread at the doorstep of Gurgaon residents.

“I firmly believe in the subscription model,” says Dutt. “I have a small target community in mind.” The last few months Dutt has spent in cultivating this base by conducting baking classes. Those students could well be not only the start-up’s customers but also its evangelists. Dutt is not alone. A growing bunch of start ups as well as large e-commerce giants are pushing the subscribe and save route for many categories of products. Earlier a model followed mostly by media companies, today, from your daily bread, milk, egg, juices to stuff like diapers, medicines, personal grooming kits, a whole bunch of subscription services are available.

Amazon & other start-ups

Amazon is, of course, the leader of the pack. In just four years, India is on its way to becoming the 3rd largest Subscribe & Save country globally for Amazon, says Saurabh Srivastava, Director – Category Management, Amazon India. “A seasoned subscriber today buys over 10 products every month through Subscribe & Save,” he says.

Significantly, the adoption of subscription services is also by customers from Tier-2 & -3 cities with Jaipur, Bhopal, Patna & Vijayawada being some of the top cities on the programme, says Srivastava.

Daily needs start-up Milk Basket, vet care services company Wiggles, puja flowers delivery start-up Rose Bazaar all have subscribing clientele and are gung-ho about the model.

Discounts, rewards

“Subscription models are essentially locking in shoppers,” notes retail expert V Rajesh. For customers, on the other hand, the advantages are almost akin to buying in bulk, without doing so on frequently-used products. On some e-commerce sites, if you subscribe to more than three products you get up to 10 per cent discount – otherwise it is five per cent. Also you have an assured supply right at your doorstep.

As Kali Shankar Das, a retired MNC executive, says, “I tried looking for Bru Gold coffee — large pack of 100 gms or above — at my neighbourhood store. He only had ₹1 satchets. I had to travel to the nearest Spencer’s to get a pack. With subscribe and save, I have set a monthly frequency of one 100 gm pack. I pay ₹227 against the mark price of ₹275.”

Also, since most subscriptions allow you to pause and rejoin, canny customers are opting in, getting the discount and then halting the subscription. But the retailers have a solution for that, too. They offer a bait of more discounts for longer subscriptions. As Dutt of Enthu Bakers says you can also tie in rewards with subscriptions and allow customers to accumulate points to make them stay subscribed.

Commodity automation and technology is making it easier for retailers to quickly offer subscriptions on items that are repurchased often. However, Amazon’s Srivastava says their programme uses manual judgement as well as data models to predict the probability of an item to be re-purchased by the same customer in a given time frame to identify re-orderable categories. “Categories with regular consumption patterns like laundry detergent, protein powder, beauty products, baby diapers and pet food are the most subscribed categories in the programme,” he says.

Changing mindset

Of course, there are challenges and it’s still a learning curve. Anushka Iyer, Founder and CEO, Wiggles.in, a pet care firm, says, “ In India, the subscription business as we know hasn’t done well historically. But the mindset is slowly but definitely changing with more consumers seeking ease and convenience over anything else.”

Initially, Wiggles had a pet care box curated by vets for pets on subscription but it was not scaling so the company had to evolve the offering. “There is definitely a bit of a learning and educational curve involved when it comes to subscription-based packages but yes, this is the future,” sums up Iyer.