The ecommerce subscription model turns one-off online purchases into recurring orders or paid memberships. The main types are subscribe-and-save replenishment, curated subscription boxes and paid loyalty memberships such as free shipping clubs. It works best for products customers use up on a cycle. Check the profit per order after discounts, shipping and fees, then plan for churn and copycats.
Key takeaways
- Consumables replenishment is the most reliable ecommerce subscription. Surprise boxes churn faster.
- Work out contribution per order after the subscriber discount, free shipping, payment and app fees, before you launch.
- Paid memberships can be a high-margin profit line: Kogan's loyalty programs earned A$61.4 million in FY26.
- A subscription isn't a moat. Dollar Shave Club's $1 billion story ended in a private-equity carve-out.
- From 1 July 2027, Australian consumer subscriptions need clear terms, prescribed reminders and online cancellation.
In the book, I use a dog biscuit example to explain why subscriptions alone aren't enough.
Say you start selling dog biscuits on subscription instead of one bag at a time. Great idea. Recurring revenue. Happy dogs.
But there's nothing stopping me doing the same thing. I could find a dog biscuit supplier, set up a template website overnight, and we're in competition by morning.
That's the ecommerce subscription problem in a nutshell. Adding a "subscribe and save" button takes an afternoon. Building a subscription business that survives the copycats takes a lot more.
Just ask Dollar Shave Club. Its launch video is one of the most famous in marketing history, and Unilever paid $1 billion for the company in 2016. In October 2023, Unilever sold a 65% stake to private-equity firm Nexus Capital Management, keeping 35%, on undisclosed terms. By then DSC was also selling through Walmart and Target. The video built awareness. A razor subscription on its own didn't build a moat.
So let's look at how to do both: build the subscription, and dig the moat.
What Does an Ecommerce Subscription Look Like in 2026?
There are four main shapes, and they behave very differently.
| Type | How it works | Example | Watch out for |
|---|---|---|---|
| Subscribe and save | Automatic repeat orders of a product, usually at a small discount | Amazon Subscribe and Save, Who Gives A Crap | Discount-only subscribers |
| Subscription box | A curated selection delivered regularly | BarkBox, Book of the Month | Novelty fades, so churn is higher |
| Paid membership | An annual or monthly fee for free shipping, member prices or perks | Kogan FIRST, Amazon Prime | Must be valuable across your whole range |
| Product plus refills | Buy the device once, subscribe to the consumable | LARQ's bottles and filters | Refill must be easy to get only from you |
Some recent numbers show how each shape is going.
Consumables. Who Gives A Crap started in 2012 with a toilet paper subscription and has since taken the brand into supermarkets, including Tesco in July 2025. The subscription became the loyal core while retail brought reach. See how Who Gives A Crap took its subscription into the supermarket.
Boxes. BARK, the company behind BarkBox, saw revenue fall 18.5% to $394.8 million in fiscal 2026 after it "made a conscious decision to stop spending on subscribers we couldn't retain profitably."
Paid memberships. Kogan's two loyalty programs, Kogan FIRST in Australia and Mighty Ape PRIMATE in New Zealand, earned A$61.4 million in FY26, up 14.3%, with A$11.3 million of membership fees paid in advance at 30 June 2026. Read how Kogan First grew into a A$61 million loyalty engine.
Which of the Book's Eight Models Fit an Online Brand?
| Model | How an ecommerce brand uses it | Fit |
|---|---|---|
| Consumables | Replenishment of things customers use up | Primary for most brands |
| Subscription Boxes | Curated or themed selections | Good for collectors and gifting |
| Member Benefits | Paid shipping clubs, member prices, early access | Strong for wide-range retailers |
| Insurance | Protection plans, extended warranties, replacement cover | Add-on |
| Bundled Services | Product plus service, such as setup or styling | Niche |
| Unlimited Content | Recipes, tutorials or classes alongside the product | Add-on that builds loyalty |
The consumables model is the safest. If your product runs out on a predictable cycle, the subscription is solving a real problem: the customer never runs out. The subscription box model depends on volume buying and delight, which is harder to sustain.
A Sample Three-Level Offer for a Consumables Brand
Here's an illustrative ladder for an Australian skincare or wellness brand whose hero product retails at A$64 including GST. Prices are examples only.
| Refill | Routine | Annual VIP | |
|---|---|---|---|
| What's included | Hero product, delivered every 4, 6 or 8 weeks | Three-product routine on one delivery schedule | 12 deliveries of the Routine, prepaid |
| Price (incl. GST, illustrative) | A$57.60 per delivery (10% off) | A$153 per delivery (15% off A$180) | A$1,620 a year (25% off) |
| Shipping | Free | Free | Free, express |
| Extras | Skip or pause anytime | Free travel-size gift every third delivery | Member-only launches and a birthday gift |
| Commitment | None, cancel online anytime | None, cancel online anytime | 12 months, prepaid |
The annual option does two jobs. It locks in a year of orders and brings the cash in upfront, which is the same trick behind Kogan's deferred membership income.
Price your subscribe-and-save offer
Enter your product cost, shipping, GST and fees and the free Subscription Price Calculator shows the discount you can afford.
Is Each Subscription Order Profitable? The Maths
Ecommerce subscriptions live or die on the profit per order. Work it out after every discount and fee.
Contribution per order = Price ex-GST − Product cost − Pick and pack − Shipping − Payment fees − Subscription app fees
Lifetime contribution = Contribution per order × (1 ÷ Monthly churn rate), for a monthly delivery
Worked example: the Refill plan (illustrative)
Price: A$57.60 including GST, which is A$52.36 ex-GST.
Costs per order: product A$14.00, pick and pack A$4.00, shipping A$11.00 (free to the customer), card fees at 1.75% plus 30 cents A$1.31, subscription app fee A$0.60. Total A$30.91.
Contribution: 52.36 − 30.91 = A$21.45 per order, or 41%.
At 6% monthly churn, the average subscriber stays about 16.7 orders: about A$358 of lifetime contribution. If it costs you A$80 to acquire a subscriber, that's about 4.5x.
At 10% monthly churn, they stay about 10 orders: about A$215, or 2.7x. Same product, same price, very different business. That's why churn deserves more of your attention than the discount.
Two things change these numbers fastest: shipping (heavy or bulky products can swallow the margin) and the first-order discount (a big welcome offer attracts people who cancel after one box).
Run your own numbers through the Subscription Price Calculator, then see what a subscriber is worth with the LTV Calculator.
Subscription Price CalculatorWork out a profitable monthly price after costs, GST and fees.Open the free tool →How to Launch Subscriptions in Your Online Store: Eight Steps
- Pick products customers already reorder. Look at your order history for repeat buyers and the gap between their orders. That gap is your default delivery frequency.
- Do the per-order maths. Before you choose a discount, know your contribution after shipping and fees.
- Choose your subscription app. On Shopify, that's Shopify's own Subscriptions app or a third-party platform. Check fees, dunning, skip and pause, and online cancellation.
- Set a default frequency that matches real usage. Too frequent and customers drown in stock and cancel.
- Make skip, pause and frequency changes easy. From the customer's account, in two clicks.
- Add something a copycat can't. Your own formulation, personalization, a community, content or a membership.
- Launch to existing customers first. Email repeat buyers with the offer before you spend on ads.
- Track churn by cohort and product. Fix the frequency and the first-order offer before scaling acquisition.
The Ecommerce Subscription Pitfalls
Discount-driven subscribers. A deep first-order discount brings in people who cancel after one box. BARK's 2026 results show what happens when you finally stop paying for them.
Shipping eats the margin. Free shipping is the most valued perk and the biggest cost. Price it in, or set a minimum order value.
Too much stock. Customers who end up with a cupboard full of product cancel. A smart default frequency and easy skips fix most of it.
Failed payments. Expired cards quietly cancel subscribers who never meant to leave. Set up card-update reminders and retries.
No moat. If your subscription is a discount on a commodity, someone will undercut it. Use the MOATS Scorecard to see where you're exposed.
What Australian Rules Apply to Ecommerce Subscriptions?
General information as at October 2026, not legal advice.
Subscription rules from 1 July 2027. Consumer subscriptions, free trials and discounted introductory periods all count under the Unfair Trading Practices Act 2026. You'll need to disclose key terms upfront, send reminders set by regulation, and offer a straightforward way to cancel, online if customers signed up online. The Act also bans manipulative design that unreasonably pressures or obstructs consumers.
The HelloFresh warning. In December 2025 the ACCC sued HelloFresh and Youfoodz, alleging tens of thousands of customers were charged after canceling before the stated cut-off, and that HelloFresh required payment details just to view the full menu. Read how HelloFresh's cut-off helped write Australia's new law.
Show the full price. From 1 July 2027 the Act also requires transaction-based fees, such as payment surcharges, to be displayed with the base price for consumer goods.
GST. Prices to Australian consumers must include GST if you're registered. Check your compliance against the AU Subscription Compliance Checker and the subscription trap laws guide.
The Accountant's Angle: Cash Flow, Stock and Value
Subscriptions change three things in an online brand's numbers.
Forecasting gets easier. Known repeat orders make stock planning more accurate, which frees up cash tied up in inventory.
Annual memberships bring cash forward. Kogan's A$11.3 million of prepaid membership fees is cash in the bank before the purchases happen. It's also a liability until the membership is delivered, so don't spend it twice.
Buyers value repeat revenue. A brand with a documented subscriber base, cohort retention and contribution per order is far easier to value than one living on paid ads and one-off orders.
Compare one-off sales with subscriptions side by side in the Subscription vs One-off Profit Calculator.
Free Subscription Profit Review
Australian business owners can book a free 30-minute review with a BPAG Accountants adviser. An honest conversation about:
- whether a subscription model could work for your business
- how recurring revenue could cover your fixed costs each month
- how it could lift what your business is worth
No cost, no obligation. General information only until we understand your situation.
What to Do Next
Export your last twelve months of orders. Find customers who bought the same product three or more times, and work out the average gap between orders.
That list is your first subscription audience, and that gap is your default frequency.
Then ask yourself the dog biscuit question: if someone copied my subscription tomorrow with a template website, why would my subscribers stay?
Frequently asked questions
How do I add subscriptions to a Shopify store?
Install a subscription app from the Shopify App Store, such as Shopify's own Subscriptions app or a third-party platform, then create selling plans for the products you want to offer, with delivery frequencies and discounts. Check the app's fees, how it handles failed payments, skips and pauses, and whether customers can cancel online from their account. Test the full journey before launch.
What discount should a subscribe-and-save offer give?
There's no universal number. Start from your contribution per order after shipping and fees, and work out how much of it you can give away. Amazon's Subscribe and Save, which saved me 10% on my peppermint tea, is the model most customers know. Many brands find free shipping matters more to customers than a deeper discount, so test both before cutting your price.
Should subscribers be able to skip or pause deliveries?
Yes. Letting customers skip a delivery or pause for a month keeps many who would otherwise cancel because they have too much stock. Make it easy to do from their account. Skips cost you an order, but a cancellation costs you every future order, and a hidden pause button won't sit well with Australia's new subscription rules.
Is a paid membership better than a product subscription?
They do different jobs. A product subscription locks in repeat orders of one item. A paid membership, like free shipping and member prices for an annual fee, increases how often members shop across your whole range and brings cash in upfront. Retailers with wide ranges and frequent buyers suit memberships. Single-product brands suit replenishment.
What churn rate should an ecommerce subscription expect?
Recurly's July 2026 network data puts the median churn for ecommerce subscriptions, including boxes, at 4.25%, with about a third of that from failed payments. Replenishment products with a clear usage cycle tend to hold customers longer than surprise boxes. Track churn by product and by delivery frequency, because a wrong default frequency is a common cause.
General information only, current as at October 2026. It isn't legal, tax or financial advice and doesn't consider your circumstances. Speak to a qualified adviser before acting.
Talk it through with a BPAG adviser
Free for Australian business owners: a 30-minute Subscription Profit Review on whether a subscription suits your business.
Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- Unilever: Unilever announces the sale of Dollar Shave Club (26 October 2023)
- Kogan.com: FY26 results announcement (24 August 2026)
- The Guardian: Who Gives a Crap co-founder aims for 'world domination' (27 July 2025)
- BARK Reports Fiscal Fourth Quarter and Full Year 2026 Results (9 June 2026)
- Recurly, Churn rate benchmarks (July 2026 network data)
- ACCC: HelloFresh and Youfoodz in court over alleged subscription traps (December 2025)
- Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 (No. 64, 2026)
- Amazon: Subscribe & Save for sellers
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.