March 21, 2023

Consumer adaptation: Subscription commerce expands despite inflation and reduced spending

Written by Christian Dunbar

Over the past few years, the rise in the Consumer Price Index (CPI) and the increase in the cost of goods and services has, in turn, highly influenced consumer buying behavior. A rise in CPI has generally led to more cautious consumer spending, with a focus on value and cost-effective alternatives. Despite these inflationary pressures, the subscription commerce industry has seen steady growth. But for what reasons is this business model in such strive in these challenging times for the general market?

Subscription commerce: a growing industry

In recent years, subscription commerce has demonstrated consistent growth, with a surge in popularity across different verticals. In 2022, key performance indicators (KPIs) for subscription merchants, such as average order value (AOV), customer lifetime value (LTV), monthly recurring revenue (MRR), customer churn, and customer retention, all improved year over year. Amongst the many markets, here are a few notable ones in subscription commerce and their AOV growth from 2021-2022:

But for what reasons are these subscription markets experiencing such growth?

The rise in CPI has changed people’s general shopping behavior and made people reevaluate how they spend their money. They prioritize differently, which in many ways challenges the financial world. However, this situation also brings opportunities for businesses to reshape their business model to match the changed shopping trends. Despite the inflationary pressures, the subscription commerce industry has demonstrated resilience and growth. In fact, the average order value (AOV) in subscription commerce has followed a similar growth trajectory to the CPI, suggesting that inflation has played a key role in AOV growth. Factors which people seem to value in these times with growing prices fit well with benefits available in subscription services. This includes:

  • Predictable spending: Subscription services help customers budget more effectively.
  • Value: Exclusive offers, discounts, and access to limited-edition products enhance the perceived value of subscriptions.
  • Convenience: Automated purchases and delivery save customers time and effort.
  • Personalization: Tailored products and services cater to individual needs and preferences.
  • Customer loyalty: Subscription commerce fosters strong relationships between brands and customers, leading to higher retention rates and long-term growth.

The Future of Subscription Commerce:

Subscription commerce is expected to continue its growth trajectory in the future, as businesses explore new ways to engage customers and offer unique and custom-tailored subscription experiences. The increasing popularity of eco-friendly products, personalized wellness solutions, and virtual experiences are just a few examples of how subscription commerce will continue to evolve and adapt to meet the demands of an ever-changing consumer landscape.

Providing subscriptions on Shopify

One platform that has been instrumental in the success of subscription commerce is the Recharge Payment System. Specifically designed for Shopify stores, Recharge streamlines the entire process of managing subscription services. Its user-friendly interface, robust features, and seamless integration with Shopify make it a go-to choice for businesses looking to offer subscription options to their customers.

The Recharge Payment System meets the needs of consumers who prioritize value and convenience in their spending. By allowing businesses to offer tailored plans, discounts, and customizable billing and shipping schedules, Recharge makes it easier for customers to find a subscription that suits their preferences and budget. This not only enhances the overall customer experience but also encourages repeat business and long-term loyalty. It’s also easy both for the merchant as well as for the customer to edit their subscription settings.

In conclusion, subscription commerce has demonstrated its resilience and adaptability in the face of changing economic conditions and consumer spending habits. As businesses continue to explore the potential of subscription models, platforms like the Recharge Payment System will play a pivotal role in meeting consumers’ evolving priorities and ensuring the sustained growth of subscription commerce.

Copenhagen Office

Vestergade 18E, 3.
1456 Copenhagen
CVR: 43399233

Follow us


Privacy Policy
Copyright © 2024. Mercive. All rights reserved.