Assignment 1

1. Subscription Commerce

 It is a business model by which consumers subscribe to periodically receive a product or a box of new products or samples. One of the three types of subscription commerce is sampling models which allow subscribers to receive new products and samples. They are found mainly in beauty and food sector. Products and samples are delivered in “surprise boxes”. In this case, subscription commerce companies have two customers:

Subscribers who want to discover new products ; Brands who want to promote their new products

Companies Using Subscription Commerce : Birch Box, Jolie Box , Fab Bag

The Pros of Subscription Commerce

More In-depth Relationship With CustomersA subcom model allows for a much more in-depth relationship with customers since

by buying they are entering a potentially longer lasting relationship with the company. It’s almost like becoming a family.

Continuous Recurring Stream Of RevenueThis is definitely a big thing from the business point of view. By its definition a subcom

model offers a continuous and recurring stream of revenue from each subscriber without a need to influence their repeat purchase (as it is the case with more traditional ecommerce model).

Easier Business PlanningSubscription commerce model allows for a much more definite business planning. The

model allows to plan the customer acquisition costs, determine the lifetime value of a customer and the churn rate (the rate at which users unsubscribe from the service), allowing to improve your planning ahead your business expansion.

Cons of Subscription Model

Hard to Attract One Time ShoppersA subscription commerce is a hard sell to one time shoppers. Buyers looking to purchase

what you are selling only once will be immediately put off by the need to subscribe. Naturally, some people might subscribe for a month to get what they want and unsubscribe after they receive their purchase. However, the whole operation is tedious enough to go through for people who are accustomed to making a quick one-time purchase.

Potentially Short Term Business ModelThere is also a potential that the subcom business model will be burnt pretty quickly, just

like daily deals and flash sales models in the past. In fact, many pioneers of subscription commerce are slowly moving away from the model (or introducing variations to it) which might suggest that the subcom era might be over.

Operations Process in Subscription Model

1. Automate Order ManagementIt all starts with management of your subscription orders. For many online sellers, the process of managing these orders is manual, including the creation of new subscription orders, billing management and ongoing administration and fulfilment. This means the process is slow, time intensive and ultimately costly.

There are a number of shopping carts and ecommerce platforms that are great at managing subscription orders for you. They can generate recurring orders automatically, send ongoing notifications to customers, provide flexibility with subscription interval options, enable discounting incentives, and  allow your customers to manage their subscriptions and billing information themselves, saving you time and money.2. Pre-Pack & Label OrdersOne nice thing about subscription orders is their predictability. And when it comes to order fulfilment, predictability can lead to efficiency.

If, for example, you know that each month you are going to ship 2,000 recurring orders of your dark roast coffee, they can be picked, packed and labeled ahead of time, cutting your order processing costs as a result of the increased speed that goes along with this level of redundancy.

With recurring orders, the product mix, and the extent to which that product mix varies with each recurring order, will have an impact on the speed and level of redundancy that goes along with processing those orders. But in general, the ability to plan for ongoing subscription orders provides an opportunity for merchants to cut processing costs.3. Evaluate Cost Effective Shipping OptionsThe predictability of recurring subscription orders is also beneficial from a shipping standpoint. Given that merchants tend to have a good deal of lead time, they can initiate the process of fulfilling those orders several days before their customers are expecting them, allowing those merchants to use a slower, more economical shipping method, such as a consolidated option.

Financial Process in Subscription Commerce

a) In traditional businesses, sales and billing operations are separate, but linear functions

We’re all familiar with how traditional one-time product transactions run through the quote-to-cash process. It’s very linear.

Figure : Process Flow in Traditional business

Imagine Sally who works in sales ops. She helps sales reps generate quotes and pricing proposals. These quotes ultimately lead to order forms that are extended to the customers for signature to book the deal. Once she has a signed order she will ship their product or fulfil their service. Sally’s job is now done.

Now imagine Bill from billing ops. Once Sally in sales ops has completed a signed order and fulfilled the product, she throws the customer account over the wall to Bill. He’ll then generate and extend an invoice to the customer from the order form and will then receive payment against the invoice. Finally, Bill will record these transaction in the their accounting system.

Sally and Bill have been working together for the past 5 years, but they have never met in person.

b) In Subscription Commerce there is lot of quote to cash complexity

Now let’s take a look at a similar transaction in a subscription business. Once again, Sally will work with her sales reps to create a quote and pricing proposal. This will lead to an order form for signature.

However, rather than ship a product Sally is creating a subscription and provisioning their service. Bill picks up the ball and extends an invoice to the customer for their first month of service. Once again he collects payment on the invoice and records the revenue in his accounting system.

Figure 2: Fianancial Model for subscription commerce

But Bill is not done.  At the start of the second month he has to generate another invoice, collect another payment for the same transaction for the second month of service.

Meanwhile Sally has been working on an upsell opportunity with her sales rep. Before she creates the quote she needs visibility into the subscription, invoice and payment status. Once the upsell quote is created this triggers another order form and a subsequent amendment to the existing subscription. Bill has to create yet another invoice, collect another payment and record the transaction within his accounting system.

Assignment 2

Soch

Sales Promotion – Advertising

Soch is an exclusive collection of Indian wear perfect for every occasion.

Voonik.com

Sales Promotion – Discount offers

Voonik.com recently promoted the products through discounts and offers. It promoted its offers through advertising on facebook page of the company.

Dainik Bhaskar

Dainik Bhaskar is a local newspaper brand which is promoting its sales through various technological platforms. It has developed a mobile application which is promoted by college students. It is promoting its sales through sharing of various news or information on social networking sites like facebook.

Paytm

Affiliate Marketing

Various companies like American Tourister tie-up with Paytm and do affiliate marketing by promoting their products and offers on facebook.

Craftsvilla

Craftsvilla is an e-commerce marketplace for Jewellery, sarees and handicrafts from designers and artisans.

Craftsvilla Miss Ethnic 2015 is an initiative by Craftsvilla.com to give every woman in this world a chance to become "Diva of Billions". It is an online competition wherein participants have to send their photographs in ethnic attire. This is creating buzz about Craftsvilla in all females who love shopping and have unique style statement.

Purplle.com

Sales Promotion – Advertising

It is a cosmetic store which promotes its sales through advertising on facebook.

BestBuy

BestBuy advertises through facebook page by promoting its sales and discount offers. It encourages people to promote the information and share it with friends.

Shine.com

Recruitment Drive

Shine conducts its recruitment drive by promoting its agency through facebook.

Android Authority

Android Authority conducts a sales promotion program called ‘Sunday Giveaway’ where it gives away android phones by conducting competitions. It ties up with companies which act like sponsors.

Kitkat

KitKat created a #MyBreakKitKat campaign around the notion of how anyone can take a break anytime and anywhere. It used Facebook and Instagram extensively.