How would you approach adding a new ecommerce feature "Shop" to a subscription model product?
Traditionally has been focusing on subscription business model like ordering a monthly sub box to home. In order to expand consumer base, shifting to e-commerce model with a new feature called 'Shop', which users can buy pieces directly from the site? What are the opportunities and challenges with this pivot, for marketing and product? How would you measure success of this new 'Shop' feature? How do you think about cannibalization between sub box and direct buys? How to integrate this well the current marketing program?
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To rephrase the problem, the traditionaly model has been to order a monthly subscription box. In order the enlarge the customer base, and shift towards the e-com model, the company is launching a new feature called 'Shop' where users can buy directly pieces from the site.
To discuss -
- Opportunites & challenges for both marketing and product.
- What would success look like?
- Impact of cannibalization on the sub box
- How to integrate 'Shop' with the current marketing program?
Clarifying questions
- What is the product that is sold? Health & nutrition supplments - the requirement for these is constant and limited variability
- How are the traditional subscribers acquired? Gyms, Health & wellness stores, website
- What are the current touchpoints for engagement with the subscribers? There is a web portal where subscribers can change their subscription details and that is where the company wants to launch 'Shop'
- What geographies does the company cater to? US
- Is the goal of Shop to acquire new customers or also increase revenue from existing users? To increase userbase
Opportunities for Product & marketing
- Ability to sell more products & product categories
- Increase userbase
- Increase revenue from exiting users with upsells
- Additional touchpoints to engage with customers
- Product recommendations
- Business intelligence about customer behaviour
Challenges
- Ecom customers have more options are not as hooked as subscribing customers
- Risk losing exisiting cash cow(subscribers) to cannibalization and competition
Success metrics
- New customers
- Orders
- Avg order value
- Orders per user per time range(to check if Shop is getting repeat orders from customers like subscribers)
- Orders from existing subscribers(secondary metric to check for upsell orders from subscribers)
- Cancellation of subscriptions (counter metric to check for cannibalization)
Impact of cannibalization
- Existing customers might have the option the reevaluate their need for the products they are currently subscribing to
- As ecommerce is not as sticky as subscription, these customers could look at competitor offerings and some of these customers could be lost
- The traditional channel of acquiring subscribers might not be suited for ecommerce
Integration with existing marketing
- The strategy should be to use existing channels to acquire new customers to the ecom model without risking any adverse impact to the subscription model. New customers should be given the option to 'Shop' or subscribe
- Targeted engagement strategy to push new shop customers for repeat purchase
- In order to check against risks of cannibalization, subscribers should get a small discount or some other incentive like reduced delivery costs compared to shop as subsribers are guaranteed purchasers
- Integration of Shop within the subscription model to have a hybrid offering where customers can add more items to their sub box from shop saving on delivery fees
To summarize, I believe that the company has a good alternate revenue channel with Shop. Care should be taken to ensure there is limited impact to exisitng customers. The company should also try to provide a hybrid offering to customers so as to leverage the benefits of both channels.
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