#4 The subscribing to receive tangible products business model
Looking for long-term customers? Sign users up to a regular subscription by enticing them with gifts that keep on giving
The traditional e-commerce model still dominates the online tangible goods market. If a consumer wants to buy a book, a suit or kitchen table the chances are he or she will select the required item and pay the full amount by credit or debit card.
For the retailer, it’s often a one-off transaction. The customer may come back again to buy something else and over time even become a loyal advocate of the brand but there are no guarantees.
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So how do you bring customers back time and time again? Well, you might offer a monthly gift pack in return for a regular subscription. This was an idea that started in the US but it has spread to the UK. The likes of office snacks business Graze.com and mobile-first subscription-based florist Bloom & Wild are proponents of the business model.
For instance, the Close Shave Society will send you a packet of high quality razors every month and those who sign up for a year get the cheapest deal. As co-founder Zach Hanauer notes, it’s a cashflow-friendly arrangement. “When we started it seemed like a good way to get £66 up front,” he says. And for the customer it’s a means to forget about buying razors on an ad hoc basis. Ideal for busy office workers who don’t have time to go to Boots.
Shaving is something of a utility market but the same principle has also been applied to monthly gift boxes for those who want to receive a treat through the post.
Ideally it’s a model that delivers long-term customers, but Hanauer acknowledges the feeling of being “locked in” could be a deterrent. “We are at pains to let people know they can leave at any time,” he says.
This is #4 out of 10 ways to make money from your tech business idea.
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