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Amazon launches marketplace for subscription businesses (AMZN)
BI Intelligence
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Amazon announced on Monday that its Subscribe with Amazon service is open for signups, according to TechCrunch.
The service allows subscription businesses — like SlingTV, The Wall Street Journal, and Headspace — to sell subscriptions through Amazon.
The e-commerce giant will collect 30% of subscription sales during a business' first year on the marketplace, then 15% in subsequent years.
Amazon provides advantages — such as facilitating subscription management for customers and allowing merchants access to more subscribers — that make it enticing for businesses to list on the new marketplace. For consumers with several subscription services, keeping account information like payment methods up-to-date can be time-consuming. This could discourage customers from renewing as they may rethink updating their purchase information if it is a tedious process, or they may forget to update it altogether. Additionally, it allows customers to explore and discover new subscription businesses, similar to an app store, which will enable new businesses to gain visibility more quickly than through traditional marketing channels.
Selling third-party subscription services is a natural extension of Amazon’s core business, making it an easy way to capture new revenue. Amazon already has the infrastructure and experience in setting up a successful marketplace, which means this move will allow the e-commerce giant to capture additional revenue without having to deploy the resources a new business venture would require. This, in addition to the advantages businesses have in listing on the service, may quickly make the segment a successful one.
The new business will further Amazon’s reach into consumers' purchases, adding pressure to legacy retailers. Subscribe with Amazon marks the company's push into selling third-party subscription services, making it more of a one-stop shop for customers. As Amazon continues to add more features that meet consumer needs — video streaming, free two-day shipping, access to subscription services — this will put more pressure on legacy retailers as they fight to keep customers.
E-commerce has been on the rise in the last several years, thanks in large part to titans in the industry such as Amazon and Alibaba. E-commerce will truly become the future of retail, as nearly all of the growth in the retail sector now takes place in the digital space.
BI Intelligence, Business Insider's premium research service, forecasts that U.S. consumers will spend $385 billion online in 2016. Moreover, BI Intelligence predicts that number will grow to $632 billion in 2020.
This is hardly surprising considering e-commerce's healthy growth. Though the U.S. retail average growth rate in the first half of 2016 was just 2% for total retail, it was 16% for e-commerce.
The number of online shoppers has grown by nearly 20 million from 2015 to 2016. And these 224 million shoppers are spending more, as the total amount spent online grew from $61 billion in the first quarter of 2015 to $68 billion in Q1 2016. Finally, these customers are transacting more frequently, as the number of online transactions has risen by 115 million from 2015 to 2016.
But all of this shopping online creates its own set of challenges, both for consumers and the companies that are trying to get their products onto shoppers' screens and into their shopping carts. In short, you need a plan.
And to create your ultimate e-commerce battle plan, you need the right intel.
BI Intelligence is here to help.
Our team of industry experts has you covered on topics such as:
Shopping cart abandonment
Marketing effectiveness
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And much more
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