Subscription-Based Niche Online Business - dummies

By Shannon Belew, Joel Elad

A niche online business model exists that extends the value (and profitability) of any niche market. Subscription-based online businesses are making a splash in the world of e-commerce. For that matter, lots of offline businesses in both the B2B (business to business) and B2C (business to consumer) industries are extending their products and services to the online marketplace through a subscription-based selling model.

And the returns on this niche delivery mode keep coming — every month!

For B2B companies, you often hear this type of niche service offering attached to cloud-based or hosted products and services. It’s considered a software-as-a-service (SaaS) model, where customers access products from your website (or server) and pay a monthly fee for the service, which becomes recurring revenue for you.

Hosted shopping carts, e-commerce solutions and storefronts, and website hosting are examples of subscription-based services you might use to run an online business.

This same approach to online business is a big trend, especially when you apply it to another niche market or specialty product. For example, when it comes to selling to pet owners, BarkBox figured out how to take advantage of subscription-based selling to a very lucrative niche market. Each month, BarkBox delivers a goodie-box filled with toys, treats, and gadgets for both you and your favorite furry friend.

Customers choose a treat box based on the size of their dog and the frequency of deliveries (one month only, every month for a period of three months, or every month for a year), as shown.

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Monthly treats aren’t just for customers with four feet (or paws). Healthy living is another niche market that continues to gather steam, and it crosses almost all age groups. Typically, this niche contains products and services that promote a healthy diet and exercise.

Naturebox delivers healthy snacks to human customers on a regular basis. The site lets customers customize selections based on the size of box (based on the number of snacks included in the box) and on self-selecting a type of snack or being surprised with new offerings each month.

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Or you can send a healthy subscription-based delivery as a gift. The fees range from $60 for a three-month subscription to nearly $200 for an annual subscription. The revenue from this type of online business adds up to a steady monthly stream.

You may notice that these types of businesses are reminiscent of the fruit-of-the-month clubs that were popular in prior decades. This is the same type of business, but the concept has been updated for the Internet and the business is no longer reserved for only fruits and cheeses. Some online businesses are creating their own niche with a very narrow product offering.

Foot Cardigan takes a common product but specializes in only that one product — socks!

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The site gives customers a choice of subscription plans for receiving the monthly footwear. That’s right. Customers purchase socks that are delivered to them on a monthly basis. How great is that for a niche online business?

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There’s no end to the type of niche you can create for your online business. But when it comes to creating a niche business using subscription-based products and services, offer the following:

  • Convenience: Customers are drawn to subscription-based services or products because it’s convenient. Often, these are items that they need on a regular basis, so having them delivered on a regular basis saves a trip to a traditional bricks-and-mortar store.

  • Savings: More than saving the time it takes to go to an offline store, customers like subscription-based services that save money. If customers agree to receive products on a regular basis, they often expect to trim the normal price tag for the item.

  • Uniqueness: Sometimes online subscription-based businesses are popular simply because they offer quirky, unusual, or one-of-a-kind products. Customers also like being able to get something that may not be available in their local geographic market.

  • Simplicity: Especially in B2B markets, customers look for subscription-based services and products because they are easy to use. The same products, often technologies, may be difficult or expensive to maintain at the customer’s business.

  • A treat: Like the monthly delivery of fun, quirky socks, sometimes customers want to send themselves, or others, a treat. It may not be something they normally buy, particularly on a regular basis, but who doesn’t love to come home and find a special box of goodies waiting for them every month?

No matter what type of product or service you consider offering, delivering it on a subscription basis can add up to a booming e-commerce niche business for you.