

Ask HN: Subscription based E-Commerce - nurik

What do you think about the current e-commerce trend of subscription based retail? Such as dollarshaveclub.com etc.? Do you think it's a business model with long term viability? 
What other products do you see fit this model?
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haxplorer
It is a very healthy business model. Since repeated transactions are kind of
guaranteed to happen, the company could spend confidently on acquiring new
customers. They don't have to spend time and again on the same customer to
acquire newer transactions from them.

Here is how most non-subscription based e-commerce companies today work: The
company shows some traction, gets good funding, acquires customers at a cost
higher than the value of the current transaction, with the hope that the
customer would later come back to buy more, and the company could recover the
acquisition cost over time, and make profits. But every other competitor in
the space is doing the same, and the customers have multiple places to buy
from. So, the company ends up acquiring the same customer time and again, and
all these costs get added up to the customer acquisition cost. But in the
early stages, the lifetime value of the customer wouldn't be evident, and the
company might end up spending lot more than the lifetime value to acquire
transactions in the short term.

This problem doesn't happen with subscription based e-commerce companies, as
long as they provide a good service and are able to retain the subscriptions.
They could pay for advertisements on a cost per acquisition model, and count
only new customer acquisitions, and subscription upgrades are conversions.
This way their customer acquisition cost would be constant and under control.

Here are some of the areas where subscription based e-commerce would work
well: 1) Groceries, fruits and vegetables 2) Cosmetics and sanitary products -
Facial creams, lipsticks, skin care products, after shave lotion, shaving
foam, kitchen napkins, toilet papers, sanitary napkins & tampons, condoms,
cleaning agents, detergents, etc. 3) Baby products - diapers, baby oil, talc,
etc. 4) Medicines - Diabetic, blood pressure control, cancer drugs, etc. - But
there are regulatory concerns here 5) Undergarments, socks, etc.

Most of this is already being done by some company or the other.

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knes
Hey,

I just launched 3 days ago a subscription based business called Foodsterbox (
<http://www.foodsterbox.com> In french for the Belgium test market ).

My "Box" contains 5 to 7 high end culinary products ( each between 15€-20€
retail price ) that are selected around a monthly theme. The customer also
receive 5 recipes from well known chefs and an educational guide related to
the theme of month.

The hardest thing for us was definitely the price negotiation. Margin in food
are very low most of the time and thus it is very hard for producers to lower
their price / give us free stuff. Also, most of the small producers doesn't
really understand the value of marketing through the box an stuff like that so
it make it even harder to negotiate.

Finally, in Belgium the subscription based business is really not well known
so there's a lot of "education" about the concept to do too where if we would
like to launch in UK, France, USA consumers already know about the "in the
box" business and it make that much easier to sell it to them.

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callmeed
There are actually some really good insights on this space over at Quora:

[http://www.quora.com/E-Commerce/So-what-are-the-most-
interes...](http://www.quora.com/E-Commerce/So-what-are-the-most-interesting-
eCommerce-subscription-businesses-going-on-right-now)

<http://www.quora.com/Subscription-Services/questions>

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mahendrabaid
From a buyer perspective, I find it bit challenging. Generally, people don't
like to commit for a fixed expenditure.

Having said that, as mentioned below; there would be some areas or products
where it would work as it would save on other expenditure.

I believe like offline world, online also would have all models. It is on use
to make most of a particular model.

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nurik
Wow, Thanks for the comments! Very insightful...I like the idea to sell
medical products on a subscription based model...it has some schleps related
to it :)<http://paulgraham.com/schlep.html>

