Subscription services have become an integral part of our daily lives. We rely on digital giants like Netflix, Amazon Prime, and Spotify to enhance our entertainment experiences. But did you know that the subscription business model has been around for a long time, even before the digital era?
In the past, subscription businesses relied on mail networks to collect and deliver products to their customers. However, the landscape has evolved significantly. Today, many businesses are adopting a hybrid approach, combining the efficiency of e-commerce with physical subscriptions and packaged goods traditionally associated with brick-and-mortar shopping.
Physical Subscriptions: A Growing Trend
Companies like Blue Apron and Dollar Shave Club were the pioneers of the physical subscription trade. They understood the value of offering “Subscribe & Save” options on popular products. With the rise of thousands of subscription businesses, this sector has become one of the most captivating in e-commerce, grabbing the attention of more and more customers.
In 2011, subscription e-commerce businesses generated $57 million in revenue. Fast forward to 2016, and that number had skyrocketed to $2.6 billion. The growth is undeniable, and there’s no sign of it slowing down.
Unveiling the Secrets of the Industry
Until recently, there was a lack of in-depth information about the physical subscription industry. We only knew about the success stories, but little was known about the industry as a whole. That changed when ReCharge, a leading subscription platform, revealed confidential data about the physical subscription commerce at ChargeX 2019.
The data, gathered from over 4,000 clients across 12 different verticals, allowed us to dive deeper into the industry and gain valuable insights.
Understanding Subscription Schedules
Different industries have different preferences when it comes to subscription schedules. For verticals like Health & Wellness, Beauty, Home, and Fashion, monthly subscriptions are the most popular choice. These products may not be necessities, but they have a loyal following of buyers.
On the other hand, industries like coffee, beverages, and pets have custom plan lengths that go beyond a month. These products have a higher importance for customers, and being able to choose a delivery schedule is a significant advantage.
Introducing Shopify Subscription APIs
In October 2020, Shopify introduced subscription APIs, allowing partners and developers to create new subscription experiences directly within Shopify Checkout. This upgrade, including the Shopify Subscription APIs and Product Subscription App Extension, empowers businesses to adapt to changing merchant models.
With these new APIs and app extensions, developers can:
- Create native Shopify Checkout subscription apps to enhance the membership purchase and maintenance experience.
- Leverage Shopify’s subscription order management capabilities, ensuring compliance and compatibility across the platform and app ecosystem.
- Develop new business models that Shopify doesn’t support yet, enabling innovative methods of selling for the future.
As of now, Shopify offers three different subscription APIs and tooling:
- The Selling Plan API
- The Subscription Contract API
- The Customer Payment Method API
Shopify’s Approach to Subscriptions
Before delving into the technical details, it’s essential to understand Shopify’s principles in supporting subscriptions. These principles define Shopify’s commitment to providing a robust and sustainable platform for merchants.
#1 – Ensuring Quality and Integration through Checkout
The checkout process is where customer charges are determined, agreements are made, and money is exchanged. It’s crucial for checkout to meet the highest performance and reliability standards. Shopify ensures that subscription businesses using their checkout enjoy optimal performance and alignment with the platform’s core features and ecosystem of apps.
#2 – Modeling and Storing Subscription Data
To support merchants’ success, Shopify must accurately model and maintain data about how their business operates. From available subscriptions and subscribers to product details and payment methods, Shopify stores this critical information. This centralization reduces the cost and risk of synchronization across multiple systems.
#3 – Leveraging Subscription Data for Insights
By modeling and storing subscription data, Shopify provides merchants with valuable insights. This includes recurring revenue information, targeted marketing programs, and workflows for improved subscription management. The possibilities for partners and developers to innovate using Shopify’s subscription data are endless.
#4 – Flexibility in Product Selling
Shopify empowers merchants and developers to sell products in multiple ways. Instead of limiting products to a fixed price and availability, Shopify encourages creative selling strategies that drive business growth.
#5 – Enabling Subscription Management Solutions
Subscription management is a complex field with diverse solutions. From physical to digital products, Shopify supports various subscription management approaches. Their goal is to develop a platform that enables the creation of innovative solutions for merchants and developers.
Building New Solutions with Shopify Subscription APIs
Shopify app developers play a crucial role in extending the platform’s subscription capabilities. Here’s how developers should model their apps:
- Merchants define their product offerings and desired marketing strategies.
- Customers purchase and manage their subscriptions, including payment method updates.
- Shopify generates transactions, orders, and subscription contracts to ensure the smooth functioning of the business.
- The app automates subsequent orders based on the subscription contract, creating billing attempts, transactions, and orders.
- The app handles webhooks, payment errors, and scheduling, providing both merchants and customers with a user-friendly interface for subscription management.
To support developers, Shopify offers various tools and services, including:
- App proxy servers
- Storefront Liquid drops and properties
- App extensions
These resources allow developers to integrate app subscriptions seamlessly into Shopify’s ecosystem.
Developers are invited to leverage these tools and services to build innovative solutions that empower merchants and enhance the subscription experience.
ProgramMatek, a leading provider of e-commerce solutions, understands the importance of these groundbreaking Shopify Subscription APIs. Take your business to the next level with ProgramMatek and see the difference it can make – ProgramMatek.