Complete guide on subscriptions with Shopify Plus

Offering subscriptions lets you sell products on a recurring basis. Depending on the subscription options you offer, your customers can choose to pay an agreed price for your product in a scheduled frequency. For example, you can offer subscriptions on a monthly, weekly, or daily basis.

When a customer purchases a subscription from you, the information about the product, and the frequency of the subscription, becomes visible in your admin. To set up subscriptions, you need to complete the set up in the app that you install.

Customer payment information is stored securely by Shopify. You can’t access your customers’ full credit card information after it has been entered. 

What is a subscription?

A subscription is a business model that allows customers to pay a recurring price at scheduled intervals for goods or services. With subscription APIs, you can sell goods and services in multiple ways. For example, you can sell a product as a one-time purchase or as a recurring subscription.

This guide provides an overview of how subscriptions work in Shopify and explains our approach to building support for subscriptions. It also introduces the developer tools and resources that can be used to build and manage subscriptions in your app.

How subscriptions work?

The most common setup for any subscription product is only that a user purchases on any given day and the customer’s credit card will be charged monthly on the anniversary of their original payment. In terms of shipment date, this would be determined and communicated by the business to the customer. However, it can get more nuanced as per business requirements or providing a better customer experience.

The following are the core concepts that need to be understood with subscriptions:

• Selling Plans
• Dunning Management
• Customer Permissions
• Email Notifications
• Subscription Selling Plans

Products are configured to be part of a selling plan, which determines the available subscription options for that plan.

• Billing Frequency

Businesses will need to determine what frequency options they will give customers in which they will be billed and orders will be created.The frequency options are as follows:

• Daily
• Weekly
• Monthly
• Yearly

Each of these frequencies can be configured with a number associated, for instance, every “two months” or every “three weeks.” Businesses can offer multiples of these options to customers as well, allowing customers to subscribe from one to every four months.

Discounts for subscription

It is also possible to provide a discount for the subscription in either a percentage or fixed amount. This is most commonly used when a product is also offered as a one-time purchase item.

Dunning management

Since the customer’s credit card is automatically being charged, there is the potential for the purchase to fail unbeknownst to the cardholder and the store, for instance:

• The credit card has expired
• There is no credit available
• The card is frozen or locked
• Technical issue such as API failure

Dunning Management is what you want to happen when one of these issues occurs. The common choices available to businesses are as follows:

Number of attempts

This is the number of attempts made to try and receive payment, they tend to be within a range of 1-15.

Frequency of attempts

This is how often the attempts should occur. These are commonly provided in terms of days, by default it’s one attempt per day but it is possible to make attempts every three days for example.

Action upon the last attempt

If all of the attempts fail, then businesses will have to determine what course of action they wish to take regarding the customer’s subscription. The following is a list of options, however, each application provider tends to provide a slightly different set of options.

• Do nothing
• Cancel the subscription
• Pause the subscription
• Skip the current order
• Customer Permissions

There are also many options that each app may allow the business to configure for its customers, which can help simplify customer support. The following is a shortlist of some top-level options that may be available:

• Pausing subscription
• Skipping upcoming order
• Change next order date
• Changing order frequency (depending on selling plan)
• Self-serve cancellation
• Email Notifications

Outside of the standard Shopify email notifications, the subscription app will provide the option to send additional emails. The following is a shortlist of the most common emails.

• Subscription Created
• Upcoming Order
• Transaction Failed
• Expiring Credit Card
• Division of Responsibility

Understanding where data is stored and liabilities lay may be important to a business’s governance process. Thankfully, Shopify has done a good job outlining this information including their data modeling. The following is a summary of the responsibilities between Shopify and the app vendor.

• Shopify’s Responsibility
• Storing of the business data
• Processing both initial and renewal payments
• App Developer’s Responsibility
• Schedule and automate the billing of subscriptions
• Providing the management interface
• Limitations of Subscriptions API

As this is a newer API, there are many features that businesses may require that have yet to be released. Here are some of the limitations that we feel should be highlighted, as of the second quarter of 2021.

Subscriptions are charged shipping separately from the rest of the cart.

Shopify has released a roadmap for when many features they will be responsible for will be released. Some features may be the responsibility of the app vendor, so be sure to inquire with vendors of any features the business requires.

Business considerations

Most of the common features are the same or quite similar between each app vendor. However, some differences will likely alter the decision of which vendor to choose. The following are some key operational considerations that may vary significantly between vendors.

Third-Party app integrations

Some of the applications in the marketplace do offer integrations with other applications that you can connect by simply logging into your account and configuring. However, this is not true for all Shopify apps.

Development Friendly APIs

For organizations with development resources, they may consider choosing an app based on its available APIs for more bespoke needs.

Email Customization & Integration

There is a wide range of capabilities when it comes to email. Some vendors simply offer the ability to change the message and nothing more. Others allow for customizing the look and by opening up the HTML. Some even surface more depth through variables and logic and/or offer integrations with third-party applications like Klaviyo.

Fulfillment

Not to be overlooked, it’s vital to ensure that as a subscription business grows, subscription orders do not bottleneck one-time purchases. Every business will have specific nuances to account for, but this is necessary to plan and understand at which inflection points the business may need to increase the scale of its carrier services.

Why set up subscriptions for your Shopify store

In 2010, the founders of Birchbox came up with a simple idea: a curated box of makeup and skincare samples delivered to beauty addicts every month, for a recurring $10 fee. Today, subscription boxes span all different products and services, including razors, coffee, alcohol, and even t-shirts.

An ecommerce subscription model charges customers a recurring fee in return for the regular supply of products. This may be the replenishment of the same or similar items, or the curation of new and surprise items.

Whatever the contents, subscription boxes have four key benefits:

• Customer lifetime value – the automated repeat purchase model increases customer lifetime value and profit per customer while significantly reducing churn.
• Predictive revenue – the contract nature of subscriptions makes it easy to predict future revenue and plan cash flow for other business expenses.
• Streamlined shipping – the regularity of shipments helps streamline your fulfillment processes, keeping costs simple and consistent.
• Happy customers – whether you’re introducing new products to the market or replenishing goods in the nick of time, subscription boxes delight customers.

How to set up subscriptions on Shopify

To benefit from the power of recurring purchases, you can set up subscriptions on Shopify in four steps.

1. Establish the basics

First, establish the basics of your subscription model, including:

Contents

Are you replenishing the same product, curating new products, or enabling customers to select a mix of products?

Frequency

Are you delivering products on a weekly, monthly, or bi-monthly basis, or are you letting customers to set a custom frequency?

Payment

Are you charging customers upfront or will you use recurring billing? Will you have a free trial period? Will you allow customers to gift a subscription? What is your minimum commitment period? You might test different contents, frequencies, and payment options as your subscription sales grow, but for now, establishing the basics is crucial for the next steps.

2. Download a Shopify subscription app

Shopify and Shopify Plus do not store payment information; therefore, they can’t handle recurring orders or payments themselves – you need an app.

A Shopify subscription app adds subscription functionality to your Shopify store by updating the product pages with subscription options, storing payment and subscription information, and generating recurring orders and payments.

There are several Shopify subscription apps, but the two most effective and popular are Bold and Subscriptions by ReCharge. Both apps come with essential subscription features, including:

• Different subscription types – including mystery and build-your-own boxes.
• Mixed cart subscriptions – to allow subscription and one-time purchases at the same time.
• Customer portals – to manage subscriptions, edit frequency, and swap products.
• Cancellation flows – to incentivize customers to stay.

Bold

Bold is the number one ranked subscription box and recurring orders app for Shopify, and you might recognize the name from one of the other 18 Bold Shopify apps. The Bold app really shines across four key areas:

1. Custom subscriptions – for customers to create their own recurring orders.
2. Gift subscriptions – for facilitating gift purchases.
3. Comprehensive analytics – on absolutely everything.
4. Payment gateways – spanning multiple providers.

Bold is a great option for brands that want to scale subscriptions and businesses that are 100% subscription-based.

Subscriptions by ReCharge

Subscriptions by ReCharge is a little more advanced than Bold and comes with high-functioning integrations with your store and existing apps. The standout features of Subscriptions by ReCharge are:

1. Dunning management – for preventing and managing failed payments.
2. Automation – to offer free trials, samples, and discounts upon certain actions.
3. API – to customize the subscription journey as much as you want.
4. The customer portal theme engine – for matching your portal to your Shopify theme.

Subscriptions by ReCharge is ideal if you want subscriptions as the focal point of your business, and you want to take customization to another level.

3. Set up subscription fulfillment

Delivering subscriptions on time and to a high standard is crucial for retaining subscription customers especially if customers pay up-front. While your Shopify app will re-generate orders for you, it’s up to you or your Shopify fulfillment partner to ship them accordingly. Therefore, it’s important to:

• Directly integrate your WMS or fulfillment partner with your Shopify store, so orders are processed as soon as they are re-generated.
• Provide customers with timely tracking information, so they know when their next subscription is arriving.
• Ship items in 2-days or less so customers aren’t waiting for orders to arrive long after payment – especially when replenishing products.

Tip: If you’re not confident in your abilities to fulfill Shopify subscriptions in-house, test the waters in Shopify with outsourced fulfillment, using a select number of products.

4. Promote and market your subscriptions

The long-term commitment of subscriptions means you need to work a little harder with your product promotions and marketing to earn customer trust, reduce risk, and convert hesitant shoppers. Great subscription marketing tactics include:

• Social proof – using influencers in your ecommerce marketing strategy to share positive reviews about your subscriptions on social media, blogs, and YouTube.
• Risk reversal – using referral schemes and discount codes to reduce the perceived risk of subscribing to your products.
• Ads – placing social media and search engine ads that showcase your subscription products and tempt customers to test short-term subscriptions.
• Value – using free shipping, trial subscriptions, and discounts to make subscriptions valuable to your customers.

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.

Subscription APIs: 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 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’.

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 now 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 Authorise.net, Stripe and PayPal Express. Though, of course, this roadmap is subject to change at any time.

Final thoughts

Subscription models increase customer lifetime value and make shopping with you even easier for customers. And, you don’t have to have a big budget, tech team, or fancy tools to get started.

All you need is a Shopify store, a subscription app, an experienced fulfillment partner, and the right attitude. Good luck!