Want Subscribers? Make It About Them

As online shopping options continue to grow, subscription choices should too. According to a recent Prosper Insights & Analytics survey, 52% of Gen-Z make purchases from their phone – customers should have flexibility and control around how they want to subscribe to products rather than feeling locked in to purchase with no way out.

The June 2022 Prosper Insights & Analytics survey found that 57.3% of respondents have an Amazon Prime Membership (annual, monthly, or monthly video), versus 55.4% in June 2021, speaking to the continued growth of subscriptions.

Upscribe is leading in subscription-first e-commerce by putting the focus on how to grow and retain subscribers rather than managing subscriptions. The company empowers merchants by removing common frictions in subscription experiences between customers and brands. Upscribe delivers a seamless experience that engages customers with brands and creates a two-way relationship between them.

I recently had a chance to sit down with Upscribe founder and CEO Dileepan Siva to discuss the evolving e-commerce landscape and how companies like his can better support both businesses and their customers’ purchasing decisions.

Gary Drenik: Tell me about your background and what led you to start Upscribe.

Dileepan Siva: I’ve loved technology—and the promise of it—since I was a kid. Before starting Upscribe, I built the growth teams at three startups that built tools to help brands scale online. All three followed different paths to acquisition and I learned a valuable lesson about the importance of customer empathy. I always knew I would find a company, but it had to be rooted in a deep understanding of what customers needed and wanted.

Prior to working at tech startups, I had spent time advising consumer brands on how to source sustainably around the world. And I was amazed at how some products like coffee and tea had become luxury while the same was not true for spices. Growing up as a global nomad and immigrant, spices were part and parcel of my heritage. I wanted to do for spices what Starbucks had done for coffee.

As I started to research this idea, I quickly realized that spices were an ingredient not a product. Spices needed to be packaged into a health and wellness product. And there were several health and wellness brands that packaged various herbs and vitamins into a daily routine, selling their products on a recurring basis or subscription. That was the lightbulb moment for me when I realized how brands leveraged subscriptions to scale.

But as I dug even deeper talking to brand owners in the industry, I kept hearing the same feedback. Almost every brand mentioned that the software tools to run subscriptions did not meet their needs. Given that I had spent years building tools to help brands scale online, why not serve this clear need in the market. Fast forward a few years and we had bootstrapped Upscribe to north of $1M ARR and profitability before raising an oversubscribed seed round.

Drenik: How have online shopping habits changed since the pandemic?

Siva: eCommerce leaped forward a decade during the pandemic. Overall, consumers that had not been as comfortable shopping online for certain products like groceries were now forced to do so. This was even more so true for older generations and that behavior change will stick to some degree. We also saw an increase in buy online and pick-up curbside in-store so there’s more fluidity in how brands and consumers interact.

But while eCommerce sped ahead, brand loyalty changed. During and after the pandemic, supply chain issues forced consumers to be open to try new brands due to out-of-stock issues. And with the number of brands moving online continuing to increase, consumers have lots of options to choose from. In addition, brand marketing has had to shift due to data privacy limitations initiated by Apple making it more difficult for brands to rely on Facebook for marketing.

Brands have no option but to put more effort into collecting and owning data about their customers. And this helps brands deliver a more personalized experience to customers based on their previous interactions with their brand. Customers now expect the brands that they shop with to deliver a personalized shopping experience. This is a trend that will continue to accelerate in the coming months and years.

Drenik: Is e-commerce changing? Is it accurate to say there is subscription fatigue?

Siva: Right now, subscription eCommerce is run from a merchant’s point of view. The merchant decides the frequency of the subscription–30, 60 or 90 days for example–and the customer selects the best option. But customers don’t always consume the product on set intervals. One customer might consume a product every day while another might finish the product in 45 days. But the merchant in this case only offers three set frequencies.

Add to this the notion of subscription fatigue which is more common for digital subscriptions. Whether it’s family and friends sharing one Netflix account or companies like Truebill that make it easy for consumers to find and cancel digital subscriptions, locking consumers into subscriptions without providing flexible options is problematic. While this may be hard for media companies offering digital subscriptions, it is possible to offer alternatives for subscriptions to products like coffee, razors, vitamins, and the like.

What if a merchant were to engage customers through email or SMS to understand consumption behavior? For example, a consumer buys a product once and then reorders the same product 45 days later. Why would the brand not send an email to that customer 40 days after the second order to reorder or subscribe? And if they didn’t want to reorder, why not offer the customer the option to select when they would like to be notified to reorder if they’re not ready. This gives brands the opportunity to personalize and consumers the flexibility in purchasing.

Drenik: What are the biggest shifts you expect we'll see in e-commerce over the next 5-10 years?

Siva: To date, brands built commerce and then community. Brands leveraged paid ads to scale their business and then built community after the fact. But with increased competition due to how easy it is to start an online store and rising advertising costs; brands have to build community first before commerce. Take the example of Glossier or other brands that built an audience online first and then layered in commerce as a signal to what the next wave of eCommerce looks like.

The second major shift is how web3 impacts eCommerce–think of it as the ownership economy. Whereas brands engage ambassadors and influencers in a pay-for-play arrangement now, imagine a future where brands offer equity in the business or in tokens to early evangelizers. The next wave of e-commerce will push beyond the subscription economy to the ownership economy. If I'm starting a brand as a merchant and there are customers that buy from me on a repeat basis or subscribe, why wouldn’t I reward them by giving them an actual stake?

Drenik: What best practices do you have for brands that want to better personalize relationships with customers?

Siva: It's critical to not only understand cohorts for any brand but execute actions based on that data. Most brands think they have one or two or three types of customers, when in fact they have many more than that. What brands need to do is to understand that they might have some customers that will only ever buy one time. Others will buy a few times and may tell a friend or too. And then there are those that subscribe, more like the superfans.

In breaking down the personas into cohorts, brands can run campaigns that are personalized. That sounds basic, but most brands even at scale don't do this. And the truth is that so much data is available to brands now that there isn’t an excuse not to segment data in a way that makes it simple for them to deliver a personalized (when, how and what a customer buys) to grow their business.

Drenik: Thanks for taking the time to discuss the evolution of thinking in the e-commerce and subscription space. It’s clear customers come first, so providing them with more choices will only help businesses, not hurt them. I look forward to seeing how Upscribe brings more value to consumers' shopping experiences.