Opportunities & Challenges For D2C Brands In Subscription Commerce Space
Subscription commerce while the term may sound Greek at the beginning, but it is actually a very familiar concept and deeply embedded in Indian context… The “Doodhwala” who used to come to our house and deliver milk everyday in-exchange of a coupon or a note in the small pocket diary were the initial days of subscription commerce. Simply put, a subscription commerce is a recurring product/service delivered to a consumer without having to pay at every transaction.
My 1st addiction to subscription commerce started during the early 2000s when I subscribed to 2 year long supply of India Today for a 2999/- and got Nike shoes free. My actual bait was Nike Shoes and since the magazine used to anyway come to my house every month. I ended up coaxing my dad to shell out this princely sum for Nike and India Today for him. So a true win-win.
While I never realized the power of this until I look at my credit card statement now and see a host of subscriptions charged every month. It’s perfect for a lazy customer like me to put all the regular things on auto mode and it’s a win-win for the retailer as well.
There are so many products and services which are standing on a huge opportunity of this trend from OTT, everyday grocery items like Milk, Bread, Eggs, detergent, sanitary napkins to razor, pet food, keto-meal boxes to my daily fix of masala chai. The list is endless and this will continue to grow as we find more products that don’t need monthly or daily ordering. In one of the research by payment gateway major Razorpay quoted that on an average Indian consumer can automate approx. 10 products easily on subscription commerce mode.
Where I see a bigger opportunity is the services space where we Indian are lazy and negligent for repairs & maintenance, cleaning services, food & dietary food, driver & cab services, florists, gardening services as these are under penetrated services and often neglected. A small fee that can automate this service can open up a huge opportunity in India. Some of these services on subscription are already up with early adopters but they are waiting to hit the mass market penetration.
While the opportunities are huge for the retailer to get a confirmed recurring revenue, loyalty and ability to introduce new products/services with the hooked customer, the challenges are even bigger when it comes to customer services as a customer who is paying a monthly fee needs ease of troubleshooting his queries as and when they arise and this user experience can be a game changer in driving loyalty or increasing churn. Maintaining quality of product/services and delivery uninterrupted 365 days a year especially in case of perishable commodities can be high cost implication for the retailer and the biggest of all the recurring payment mechanism, In India the OTP verification for each transaction is a bit of hassle and while there are ways around it with e-nach and authorization, but the process in the 1st transaction is usually cumbersome and can lose users in the process.
So, if we see it from a future perspective India definitely has more opportunities than challenges and subscription commerce will become the pillar of the Direct to Consumer business game for many categories.
