A thorough overview of the subscription commerce model in Techcrunch today by Phin Barnes from First Round Capital:
Some of my thoughts:
- Quora has been the best source on info on subscription model to date. Here is the question with the most epic answer from Elizabeth Knopf.
- The existence and success of Quidsi (Diapers.com) dampens Phin Barnes’ pov on the competing on price and convenience.
- The point about the mismatch between Shoedazzle’s monthly revenue and subscriber base data is valid and does indeed make it look like a regular ecommerce model. Business Insider has an old post on this.
- At the end of the day, subscription commerce is not that different than your regular ecommerce play. It all boils down to lifetime value per customer. Subscription commerce models help in maximizing that with favorable churn and cash flows.
- The point about cash flow / payment terms is the most underrated benefit of this model.
- The point about optimizing a subscription commerce business for your best customers is a great model because the most valuable customers will self select for the service. However, the issue is that like with most services that start out by monetizing a passionate user base, you get to a point where you need to generate demand from the mass market to further scale the business.