Changing Tides: How Subscriptions Help Brands Navigate an Evolving Industry

Subscriptions have long been an integral part of people’s lives, perhaps even more than they realize. As far back as the 16th century, people were subscribing to news via handwritten news sheets. Fast-forward a few centuries: today there are subscriptions for just about everything — from streaming services to coffee to toilet paper (and even socks). The subscription industry, which continues to evolve, is growing rapidly and projected to reach $2.6 trillion by 2028.

We’re at a critical juncture within the larger e-commerce ecosystem, which is undergoing a major shift driven by the adoption of more consumer privacy-centric data sharing practices. Namely, the deprecation of third-party cookies and privacy changes from companies such as Apple and Meta.

The impact of the privacy changes is clear: merchants have to evolve their practices to thrive in this new environment. As it becomes more difficult to track consumer data across applications and platforms, brands that are dependent on Facebook for new customer acquisition have experienced significant setbacks to the efficiency and effectiveness of their advertising programs. In this environment, brands are moving more of their focus toward customer retention and increasing the lifetime value (LTV) of those customers.

As this shift towards the prioritization of ongoing relationships between brands and their customers has increased, subscriptions have become a powerful tool in brands’ customer retention strategies. We’re seeing a huge interest in merchants wanting to implement subscriptions and other programmatic ways to drive repeat purchases. Subscriptions were always important to brands selling goods in the kitchen and bathroom verticals, but we’re now seeing more subscription offerings in verticals such as fashion and apparel or pets.

More merchants, regardless of product category, have become focused on customer retention and increasing LTV. Subscriptions have evolved from a secondary utility into a critical tool for merchants to provide additional options, such as further discounts and access to new products. Brands are able to build a relationship with their customers through recurring touchpoints. Those customers, in turn, become their biggest advocates and supporters.

To continue strengthening customer relationships and loyalty, brands need to meet customers where they are and empower them. Brands are already moving in this direction by using SMS tools that allow customers to easily change a shipping address, skip an order, or increase the number of items in their subscription. By making it easier for customers to manage their orders and seamlessly make changes, brands have more points of contact with their customers and can better anticipate their customers’ needs.

The subscription industry is still evolving. The current state of technology and business was developed over the past decade. As we fundamentally change the building blocks, businesses will need to figure out what changes are appropriate and necessary. As the industry experiences this major shift, one thing is for sure: brands need to continue learning what fuels customer loyalty and meeting customers where they are.

Oisin O’Connor is co-founder and CEO of Recharge, the leading subscription management solution, helping e-commerce merchants of all sizes launch and scale subscription offerings.