Global Subscription Ecommerce Is Projected to Extend to $478 Billion by 2025

By Mariliana Fotopoulou Wednesday, September 2, 2020

The Subscription ecommerce market is forecasted to see a Compound Annual Growth Rate (CAGR) of 68% between 2019 and 2025. It is one of the few industries which has been positively influenced by the coronavirus pandemic.

The subscription ecommerce industry has expanded exponentially in the past couple of years, with some regions seeing a growth of almost 100%. Since the start of subscription ecommerce, it has changed considerably and in reaction to its clients. It has grown significantly and become exceedingly popular, and as such, it has also become very competitive. Modern consumers want products and services that are tailored to them, are easy to use, and are adaptable.

The present subscription ecommerce isn’t restricted to magazines and newspapers anymore and has been expanded to media, entertainment, consumer goods, enterprises, and Netflix and Amazon Prime stand as major examples.

It is anticipated that almost 75% of businesses selling direct-to-consumer (D2C) will have subscription services by 2023. Shifting lifestyles and demanding work schedules around the world have been determining factors in the development of the industry and its growth.

What Is Subscription Ecommerce?

The subscription ecommerce model is primarily founded on selling a product or service on a monthly or annually recurrent basis. The focus isn’t on getting new clients, but rather on keeping the ones that they have. This means that profit is attained by having regular customers making several payments to have access to goods or services. Subscription-based services are primarily aimed at younger and more financially well-off urbanites who require convenient and customized products and services.

Research suggests that in 2018, subscription-based business websites garnered approximately 776 million visitors worldwide, with about 5.7 million customers subscribing to a service. The services range from entertainment, food & beverage, to healthcare and others. There are over 2,000 subscription-based service providers, and the market is preparing to accommodate the needs and wants of the increasing young population across the world.

Payment is also split between cash on delivery and online payments, but online payment remains the most popular form of payment, and this is only expected to increase.

How has COVID-19 Affected the Subscription Ecommerce Market?

In contrast to other industries that have faltered under the pandemic, the subscription ecommerce industry has shown its durability. Video streaming, digital news and media, and elearning businesses have seen substantial growth of more than 25%.

Travel and hospitality and sports-related businesses have not been as fortunate and have suffered a significant decrease in business.

Who Is the Primary Target Market of Subscription Ecommerce?

It is predicted that by 2030 practically 90% of the human population older than six will be online. Research conducted over the past couple of years has found that almost 15% of online shoppers have subscribed to one or another type of ecommerce service.

The market consists primarily of women. It is estimated that almost 45% of women shoppers have subscribed to, at a minimum, one ecommerce service, whereas 40% of men subscribed for the same. Still, men shoppers have more active subscriptions than women with 42% of men having three or more active subscriptions, whereas only 28% of women have the same. The market for women has also increased because of many more start-ups being formed which sell feminine products and cosmetics, including jewelry and accessories.

Subscription Ecommerce Geographical Market

North America dominates the market, with practically 70% of the market revenue in 2019. However, the Asia-Pacific region is forecasted to grow at the biggest CAGR because of enlarged internet penetration and consumer understanding of the advantages of subscription ecommerce products and services.

The Future of Subscription Ecommerce

The beauty and personal care industries appear to be at the forefront of industries that will dominate the market in the forecasted time frame and are predicted to grow at 67% CAGR. Still, businesses have been started in a wide array of categories, including beer and wine, pet foods, cosmetics, kids and baby products, feminine products, health products, and men and women clothing.

This has been driven by increasing investment by venture capitalists and emergent start-ups. Numerous well-established brands have expanded into subscription ecommerce in recognition of its potential, including P&G (Gillette on Demand), Sephora (Play!), and Walmart (Beauty Box).

Final Take

The US Small Business Administration highlights the advantages of venturing online to attract more global customers. There are currently 4.5 billion people online, and it increases consistently and considerably.

Every day, 640,00 people get access to the internet and so it is increasingly important to have an effective ecommerce strategy — even for well-established brands who need to broaden their horizons and extend their customer base.

About the Author

Mariliana Fotopoulou

Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.

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