Subscribe With Amazon: The New Self-Service Marketplace That Will Dominate Subscriptions

Subscribe With Amazon

Amazon, which compared with other online retailers has had a strong focus on subscriptions for a long while now, may just have launched it’s next future major business.

“Subscribe With Amazon” is a new self-service marketplace for (at first) digital subscriptions for (at first) the US market.

From the press release:

Subscribe with Amazon is a new way for subscription businesses to sell on Amazon, offering them targeted customer exposure through popular discovery features such as search and recommendations while also providing customers with a simple way to purchase and manage their subscriptions. Selling on Subscribe with Amazon is easy with self-service enrollment. The program allows subscription providers the ability to offer customers flexible pricing including introductory, monthly, and annual pricing options, as well as the opportunity to explore offering Prime exclusive deals. Digital subscriptions currently available span a variety of areas including streaming content, news/magazines, learning, and lifestyle. […]

“Over the years, Amazon has gained extensive experience in the memberships and subscriptions space, innovating across programs like Prime and Kindle Unlimited,” said Lovina McMurchy, general manager of Subscribe with Amazon. “Today, we’re excited to extend our selection by offering subscription businesses a self-service way to make their subscriptions available to millions of Amazon customers.”

Here are some of the subscription providers on the marketplace to give you an indea of the scope: SlingTV, Disney Story Central, Dropbox, Texture, eMeals, Fitstar by Fitbit, Creativebug, Headspace, LegalZoom, MileIQ, The Wall Street Journal, Chicago Tribune, The New Yorker, Consumer Reports.

It goes from content (The New Yorker etc.) to Services (from big like Dropbox to small like Headspace). Everything digital that can be sold as a subscription can be sold on the new Amazon marketplace.

Subscribe With Amazon

Here is what sellers will get with Subscribe With Amazon, via the marketplace’s FAQs:

In addition to reaching Amazon customers, sellers will receive the following benefits:
Customize and build a detail page: Build your own dedicated product detail page that allows Amazon customers to search, browse, discover, and purchase your subscription.
Be eligible to be featured in the Subscribe with Amazon storefront: If accepted as a seller, you’ll be eligible to receive placement in the Subscribe with Amazon storefront, where customers can discover and enjoy new subscriptions across Amazon.
Surface your subscription in automated marketing widgets: Plug into Amazon’s automated marketing algorithms, including the recommendations engine and similarity widgets.

And from the FAQs here are the current limitations:

To be eligible to apply, (i) your subscription offering must be available through a digital app, website, or software, (ii) your business address must be located in the U.S., and (iii) your customers must pay a recurring payment to access your service. We do not accept all applications, but will consider and review all eligible applicants.

But don’t be relieved that your e-commerce subscription model is safe: Here’s a hint from the FAQs of things to come:

We are not currently accepting subscriptions that include the delivery of a physical item. If you have a physical subscription offering, please sign up here and we will alert you in the event that our policy changes.

“In the event”. Ha!

Of course, Amazon at some point in the future will expand its subscription marketplace to include physical items . And one may even use Amazon for fulfillment!

Here’s the trajectory most likely, and the one Amazon is aiming for:

First, some context:

  • Digital services, aside from ad-financed ones, are mainly making money with subscriptions, mobile apps included. So, subscriptions are a very strongly groing ‘category’.
  • Media consumption is moving towards subscriptions. (Netflix, Spotify) Amazon realized this a long time ago and acted accordingly: Amazon Video, Kindle Unlimited.
  • Subscriptions can be very powerful: They change the cash flow and thus the calculations and thus can change dramatically the underlying business model.
  • Subscriptions can be bundled, as Amazon did with Amazon Prime.

Now, for Subscribe With Amazon within that context:

  • Imagine a layer connecting all kinds of subscriptions. At first this may look just like a payment service. And it sure is! For consumers ‘Subscribe With Amazon’ can become a (the?) place to see all subscriptions.
  • This is already a nice, low-effort tax model for Amazon. Amazon already has significant scale on the consumer side making Amazon a natural choice for a lot of subscription services.
  • But of course, this becomes interesting once Amazon moves away from just providing a place for selling and buying subscriptions and goes into organizing/aggregating mode: Amazon can bundle subscriptions and sell those bundles. As bundles do, everyone wins if done correctly: The services find more customers, the customers get services for less money, and Amazon, well, the company gets to collect its marketplace tax.
  • This becomes also possible by virtue of getting market data to analyze. Which Amazon already has in troves and will get more so with this marketplace. It is market insights no one else has. Amazon can (and will) use that to package and price bundles accordingly with partners who will jump on board. And, again, make no mistake: A lot will as this will make a lot of sense for most subscription providers.
  • Now, add Amazon Prime into the mix. What third-party services might Amazon add in the future to Prime? What “Prime bundles” or “Prime subsriptions” may Amazon introduce? Those could be discounts and/or premier tiers at other services. As with the Amazon Marketplace, Prime become the flywheel for ‘Subscribe With Amazon’. And even more so, as Prime itself is already a subscription it lends itself well to get connected with other subscriptions. There are already at launch the first exclusive offers for Prime members available: Fitstar by Fitbit and Texture Premium (an aggregator of digital magazine content) use this, for example.
  • Now think about stuff like meal-kit subscriptions à la Blue Apron or the fashion subscription Rent the Runway Unlimited within this new context.

One last thing: Subscription models (like SaaS) start generating profits after a few years as they need the cohorts to go through a few cycles to get to the right mix. (Getting you onto the service takes marketing money (you create a negative contribution margin), but if the product is great (read sustainably low retention rates) your presence on the service becomes eventually profitable)

What if someone can kickstart the distribution of a new subscription service?

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