Ok… so this piece in Venture Beat by CrateJoy CEO Amir Elaguizy is a bit self serving.
He still makes some very convincing points.
Subscription enables merchants to build a better business from the ground up. Subscription businesses are based on retention versus conversion, which means a better ROI on customer acquisition. They can better forecast the demand for raw materials, essentially solving the inventory problem. As a result, revenue is more predictable. In the end, businesses are smarter and faster.
But here’s the real trick — I think that subscription is actually better in commerce than it is in software. E-commerce has this huge problem that software doesn’t have — inventory management. Managing inventory is so hard that managing inventory mistakes has spawned an entire industry of businesses. Flash sales are designed to help offload excess inventory that exists due to mistaken estimations of demand. Subscription businesses don’t have this problem. If you’ve got 1,000 subscribers you can pretty accurately calculate how much product to order for those 1,000 subscribers. No more guessing at the seasonal fluctuations.
Read the whole article here.