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Selling Online Products by Subscription Is All the Rage

From The New York Times:

In a new take on an old business model, online entrepreneurs have come up with creative ways to sell products, like dog food, that have not traditionally been sold by subscription.

After Alex Zhardanovsky sold his online ad company, AzoogleAds, he went looking for a new business concept. His search took him from skin care to weight-loss products to prize giveaways. The answer that finally came to him — pet food — was inspired by sheer inconvenience. “If you’re a dog owner like I am, you go out and buy food every three or four weeks,” Mr. Zhardanovsky said. “But you usually don’t realize you need it until you’re out.”

Mr. Zhardanovsky, 34, was well aware that an online pet supply store, Pets.com, had been one of the more celebrated flameouts of the dot-com bubble. But he had an idea to build the business by taking a different approach to sales. While selling online ads, he had seen other companies, like Netflix, persuade consumers to lock in monthly fees for repeat orders. Those companies, he believed, were generally more successful and thus bought more of his ads. For his new business, Mr. Zhardanovsky’s plan was to sell pet food on a subscription basis. He figured that other pet owners had experienced the same frustrations keeping the food stocked and might be willing to sign up for a monthly delivery service as well. “Dogs never stop needing to eat,” he said.

To test his theory, Mr. Zhardanovsky and his co-founder, Joe Speiser, set up a Web page in 2009 with a form that asked customers if they would be interested in signing up for regular deliveries. They then placed a few ads online and waited to see what happened. “We had an overwhelmingly positive response from our customers who wanted to sign up for the service,” said Mr. Zhardanovsky, who lives in New York City and who proceeded to introduce PetFlow in 2010.

Continue reading the rest of the story on The New York Times