- May 13, 2021
- by Lucy Reid & Eve Rouse
- 10 minute read
As subscription-based models continue to soar within e-commerce, we take a look at how these can be implemented for merchants on Shopify Plus, and cover the platform’s new subscriptions APIs.
This article was updated in August 2021 to reflect any developments. See asterisks.
The subscriptions market is booming
From the major streaming services like Netflix and Hulu, to physical products like coffee and pet food, there are subscription offerings almost everywhere you look.
ReCharge’s State of Subscription Commerce report found subscriber growth to have increased 91% from 2019 to 2020, with average order value (AOV) up across the majority of verticals too. When we look at online retail specifically, it’s suggested that the global subscription e-commerce market represents a USD $500 billion opportunity by 2025, with explosive 70% growth year-over-year. What’s more, subscription-based brands’ annual recurring revenue (ARR) is zooming past that of some of the most established companies to exist — specifically, at a rate 9x faster than the S&P 500 average.
So, why has this business model become so popular?
The opportunity in offering subscriptions
Ultimately, the movement’s fueled largely by changes in buying behavior towards people seeking more convenient ways of shopping. These days, many consumers are looking to get their favorite products on their own schedules, without needing to head to local brick and mortar stores, or having to remember to reorder things. Having products on subscription, however, serves this like clockwork.
As well as providing value to the customer, subscription models can prove really fruitful for businesses too. Put simply, offering a product on subscription means selling it at a fixed price and on a regular basis. In turn, this leads to more predictable revenue and often easier inventory management too.
On a deeper level, having a subscription service tends to foster strong customer relationships. Loyalty’s engrained, return rates drop, and customer insights surface — informing smarter cross-sells amongst other targeted marketing activities.
If the benefits of subscriptions are tempting you into diversifying how you sell your products, let’s take a look at how you can implement subscriptions on your Shopify Plus store.
Subscriptions on Shopify Plus: how they’ve always worked
Merchants on Shopify Plus have long been able to offer subscriptions. But until recently, doing so meant needing to use an external alternative to the Shopify Checkout.
This is because Shopify didn’t provide the option to tokenize payments, so couldn’t handle the recurring orders / payments needed for this to work. Instead, merchants would turn to third-party specialists who’d developed external checkouts where payment data could be stored.
Now, however, Shopify has introduced tooling to allow these specialist providers — amongst other partners and app developers — to build subscription experiences directly within the Shopify Checkout. As merchants can sometimes be hesitant to deviate from Shopify’s native checkout (given it’s battle-tested), this seems really great news. So let’s dive into the new setup.
Subscriptions APIs: Shopify's newest checkout integration
This change means that developers are now able to build public or bespoke private subscriptions applications to meet any merchants’ needs or budgets, whilst Shopify handles the payments and security. A win, win, win scenario.
By releasing APIs as opposed to fully-formed features, Shopify offers merchants and app developers ultimate front-end flexibility — coupled with the maximum security benefits of a SaaS platform. But, as with any newly released feature, there are some gotchas to be aware of before you decide to start selling subscriptions via integrated checkout.
We did some research in order to understand what these new features really mean for merchants.
The good news
You can get started right now
The Subscription APIs were made available to a few established Shopify app partners before the official rollout. This meant some of the more well-known subscription platforms were already up and running with their checkout integrations: ReCharge, Bold and PayWhirl, for example, are all ready to download on the Shopify App Store so you can get set up with the new integrated checkout.
You don't have to upgrade if you don't want to
If you already have your subscriptions business up and running on Shopify and don’t want to change, don't worry! Whilst Shopify is cracking down on the implementation of new checkout hijacks, you won’t be forced to migrate to the newer version of your application.
ReCharge customers, for example, can continue using their current checkout ad infinitum — all product updates will be made available to both checkout-integrated and non-checkout integrated merchants, with no plans to ever sunset the 'classic checkout'.
Migrations are now supported*
Whilst, at the time of release, this wasn’t yet supported, we are now seeing the likes of ReCharge, Bold, and PayWhirl customers migrate their existing setups to the newer, integrated Shopify checkout. Of course, there’s a slightly different process for each.
Native security is included
Merchants using the new integrated checkout will now benefit from Shopify's super secure checkout settings by default. Similarly, app developers won’t need to build this into their apps either.
Improved reporting & analytics
Information about your customers’ subscriptions will now live in the Shopify admin, along with other core customer information, with reporting updated to reflect subscription behaviour.
Seamless user experience
Prior to the API release, some merchants might have worried about how their customers might react to being taken off to a different checkout with another URL. Now, all transactions will be able to complete via the Shopify checkout their customers know and trust.
Shopify Scripts works for subscriptions
Your Shopify Scripts can now access information in the cart object about which line items are subscriptions and which selling plan they belong to. This means you can write robust commercial rules for offers, discounts and freebies.
There's a roadmap
Other features on the roadmap include: support for subscriptions via local pick-up and delivery, CSV exports, and support for additional payment gateways such as Stripe. Though, of course, this roadmap is subject to change at any time. We’ll be keeping an eye out for any updates and will revisit this article as and when.
The bad news
Shopify Payments, Authorize.net, and PayPal only, for now*
Historically, merchants have been able to choose from a selection of payment providers to power their subscription checkout. But to use this new integrated checkout, merchants must use Shopify Payments, Authorize.net, or PayPal.
Do note that, at the time of release, this was limited solely to Shopify Payments, and so it’s likely more additional payment gateway support is underway.
You can learn more about using Shopify Payments here.
Headless merchants still ought to wait*
Subscription data is retrievable via the Storefront API, which is used by headless Shopify sites to surface information on a decoupled front-end. Currently, there is a cart API that could be used by headless merchants, but it’s unstable and so we don’t recommend tackling this.
More headless-compatible subscription APIs are something Shopify seems to have on the roadmap, and it feels like this could be sooner than we initially thought, so stay tuned on the headless front.
You can't use it for pre-order or rental models
Shopify has a very clear message about using the subscriptions APIs for other types of selling plan, like pre-order or rental models: don't! They are aware these are popular features, and do plan to extend the available APIs to support these in the future, but apps that are perceived to be misusing the APIs in their current form will not be approved by Shopify.
What's our take on these developments?
We're excited to see how merchants and app developers use the Subscriptions API to do great things. However, we'd advise anyone who’s currently running a subscription business on Shopify Plus to be patient. Your subscriptions providers should continue to support your existing integration and you don't want to lose any functionality by migrating before feature parity has been achieved by your subscription partner.
On the other hand, if you're a new merchant or new to selling subscriptions — we say go for it! As an early adopter of the integrated checkout, you may need to be flexible whilst waiting for the full suite of promised features, but there's already an integrated subscription app to suit every brand and budget on the Shopify App Store. We round up a couple below, starting with our go-to, ReCharge.
Subscription apps on the Shopify app store
Our top recommendation, ReCharge, powers subscriptions for fast-growing brands. They have an easy, out-of-the-box setup, that lets you get going quickly (a huge plus for those ready to start selling now). ReCharge’s product offers customizable APIs that let you tailor your subscriptions to look and work exactly as you envisage. You can see how some of our clients use ReCharge to power their subscriptions below.
Bulletproof demonstrate how certain products can be available for one-time purchase as well as subscription (whilst also offering discount on the latter). Another neat feature of Bulletproof’s subscriptions is the way in which they allow customers to choose the frequency of their package and the quantity too.
Meanwhile, some merchants like to include product quizzes to help their customers suss the right plan for them. See how Union Coffee help browsers find their perfect coffee subscription on the CoffeeClub.
These are just a few examples. Many of our clients use ReCharge. Another great thing about them is the degree of subscription customer data they have, and how they put out content that gives insights on where they see buyer trends going, so merchants can be proactive in their selling strategies.
ReCharge offer two plans: the $60 a month standard plan and the $300 a month pro plan. The pro plan offers more in-depth analytics and front-end customization options, best suited for larger data-driven and/or design-conscious clients. Do note, though, that some of the features on the Pro Plan aren’t yet compatible with the integrated checkout.
Prior to the switchover, Bold offered some great custom subscription modules including 'build a box' and 'mystery box' subscriptions — two notoriously tricky things to architect with Shopify. These features are not currently available with 'Bold V2', but they've put together a useful side by side comparison of both versions so you can understand how the changes that the new Shopify Checkout integration have impacted their product offering.
Another subscription platform that existed prior to the Shopify Checkout Integration is PayWhirl. They’re well reviewed on the Shopify app store and offer a series of plans between $0 and $249 a month. The fee charged per transaction decreases the higher the plan you're on.
Thimatic is a newly released subscription app that has launched seemingly since the new subscriptions APIs have been rolled out. They charge 0% transaction fees and their plans range from $9 to $49 a month.
A very new addition to the app store, with plans ranging from free to $59.99 a month for up to 50,000 subscriptions.
Many brands are reaping the rewards of subscriptions and we’re confident that, with Shopify’s new API release, there’s only more great things to come in this space.
Needless to say, if you’re after any advice on building or scaling your subscription business on Shopify Plus, reach out to us here.