Consistent, predictable monthly revenue is incredibly appealing to any ecommerce business owner.
And if you look at the success that subscription model leaders like The Dollar Shave Club and Birchbox have had with monthly recurring revenue, it’s easy to understand why practically everyone in ecommerce is thinking about subscriptions, and why Shopify is making some big moves in the subscription space.
Building on our blog article entitled “2021: The state of subscription e-commerce”, in this article we discuss the recent introduction of the Shopify subscription APIs + checkout and what this means for the industry and the various subscription apps on the market.
There is no doubt that Shopify is gung ho about subscriptions and its recent move is already making waves.
Shopify’s new checkout for subscriptions
Shopify is a cloud commerce solution that, until recently, has relied on the Shopify partner ecosystem to provide development builds that integrate with Shopify and enable recurring payments through apps.
It was originally announced at the October 2020 Shopify Townhall that the first Shopify Subscription APIs and tooling will be rolled out to enable partners and developers to build new Shopify subscriptions experiences directly within Shopify Checkout.
Shopify has realized its vision.
Developers can now build on Shopify Checkout. Merchants no longer have to choose between selling subscription products and using Shopify’s checkout or managing multiple checkout experiences.
Previously, when using a subscription app like, e.g., popular options Recharge or Bold, merchants guided customers to the Shopify checkout for one-time purchases and to the subscription app’s checkout for subscriptions.
Per Shopify, moving forward, partners and merchants don’t have to manage multiple checkout experiences, and customers can enjoy the same friction-free checkout experience, regardless of whether they’re purchasing a one-time or recurring product.
Check out is very important and so, for developers at least, building on Shopify Checkout guarantees a customer experience that’s been tested by over 1.8 billion orders to date, and compatibility with all future updates and optimizations made by Shopify.
Here’s what Shopify had to say about Shopify subscriptions and their rationale:
“Ensuring that subscription merchants are using Shopify’s checkout guarantees performance and integration with Shopify’s core feature set and ecosystem of apps — both today and into the future. As both Shopify and its ecosystem evolve, checkout is crucial to ensure a sustainable long-term journey for merchants.”
Recognizing the criticality of the checkout process and the growth of subscriptions more broadly, Shopify has decided to take control of this key step in the sales process.
There are some real benefits to merchants here, which we dig into in a bit, but first let’s address the elephant in the room – does this move by Shopify mean the end of subscription apps?
In other words, does Shopify Subscription functionality render obsolete and unnecessary the Recharge and Bolds Subscriptions of the world?
No, but it does limit their utility for stores with simple subscription offerings.
We’ll see what time reveals as this is very new but it seems at least that the basic Shopify subscription functionality is all that’s really necessary for a basic subscription model for single commodities such as coffee, toilet paper, toothpaste, medication, etc.
Shopify was strategic in what functionality it incorporated into its platform and what it intentionally left for app developers.
Here’s what Shopify had to say as to its reasoning:
“Subscription management is a hard problem that has many creative solutions. It’s a deep and complex domain that operates quite differently across industries, physical versus digital goods, and large versus small companies.
We believe that multiple great solutions are both possible and desirable. Each solution can target a different merchant segment. Shopify’s role is to create a platform that enables these multiple solutions to emerge.”
So the compromise Shopify arrived at, put simply, involved taking control over checkout and the creation of the subscription contract but leaving to third-party apps the scheduling of payments and updating of the subscription contracts.
Apps are responsible for designing an optimal experience that allows merchants to create and manage their subscription products.
The following table describes the division of responsibilities between Shopify Subscriptions and apps.
The following diagram illustrates the lifecycle of a subscription based on the actions of the merchant, customer, Shopify, and your app:
Improved customer data
With subscription orders created and managed by Shopify subscriptions, your app remains compatible with platform features (like Shopify Payments, shipping, discounts, reporting, etc.) and the entire app ecosystem but merchants maintain a complete picture of their customer data for both one-time and subscription customers.
Merchants will be able to access functions like:
- Getting insights from recurring revenue reports on subscription customers
- Exclusively targeting subscription customers with email campaigns
- Setting up automated workflows triggered by subscription customer actions
Data is key to helping merchants better understand their subscription customers and grow their subscription businesses.
This approach will also ensure the same data can be leveraged by all other partner apps and integrations a merchant may use.
How is this different from what happens when you use an existing subscription app such as ReCharge or Bold?
Well, it comes down to data.
By modeling and storing subscription data, Shopify is able to offer merchants insights to their business in the Shopify backend rather than splitting subscriber information across third-party apps such as Recharge or Bold.
Prior to these new updates, you would need to create a data model using multiple platforms or a wider tech stack.
For example, you might pass Shopify + Recharge data to Little Data and Google Analytics, just by way of example.
This model is the best way we can attribute specific digital marketing channels to sales data and know exactly which ads drive conversions.
The new Shopify Subscription API enables streamlining this process.
How are the big subscription apps responding to Shopify’s recent move into subscriptions?
Well, Shopify’s move is still fresh but apps clearly need to adapt or die.
Recharge Subscriptions, a top subscription app, is also on the move.
However, as of the date of this article, it seems like they haven’t updated their Shopify integration yet.
You can find more information as to Recharge’s transition to Shopify’s new native checkout here.
Check out Recharge’s FAQ below:
Do I need to make any changes to my existing store?
No. As an existing merchant, your current ReCharge configuration is still supported and no action is required by you.
ReCharge remains committed to building out functionality to the existing ReCharge checkout and to ensure continuity and a robust feature set. We intend to keep investing, adding, and improving functionality to our existing app.
While the above is true, it fails to mention the benefits of leveraging Shopify’s native checkout.
However, these benefits are mentioned in later FAQs.
Also, as seen in the Recharge FAQ below, Recharge also highlights some apparent downsides to transitioning to Shopify’s native checkout.
Are there notable changes to subscription and order functionality with the new Shopify Checkout integration?
With the Shopify Checkout, merchants have the benefit of a unified checkout experience for their customers. However, there are some notable changes that merchants should be aware of with how Shopify will handle subscriptions and subscription orders from ReCharge:
- Overrides – SKU or product titles cannot be customized in ReCharge to be a different value than what is listed in Shopify.
- Cart and note attributes – Cart and note attributes will be displayed on orders originating from checkout, but will not appear on recurring orders.
- Line item properties – Line item properties will be displayed on orders originating from checkout, but will not appear on recurring orders.
It seems like Bold, Recharge’s top competitor, already has its integration updated.
Check out this video by Bold, which references its updated integration with Shopify’s native checkout.
Further, in an email to its partners, Bold Commerce said a new feature will be coming soon – Bold Subscriptions Pro.
Bold Subscriptions Pro is a robust, API-driven subscriptions solution that provides developers and merchants unlimited flexibility to create their dream subscription offering, onboarding flow, and customer portal.
Of note, Bold Subscriptions Pro will be integrated with Shopify’s new native checkout using Shopify Payments, unlocking the potential to integrate with any app that is already integrated with Shopify’s checkout.
Many people are curious why Shopify didn’t go further with its subscription offering and build subscriptions into its core ecommerce offering.
See this interesting Reddit thread on the topic.
Either way, what’s clear is that there will be lots of future innovation and competition in the subscription space, and Shopify’s recent move has certainly created an environment enabling such competition.
Exciting times for sure!
We are still early in Shopify’s foray into the subscription space but we are already seeing real movement.
Subscription apps are clearly working hard to adapt to this new reality.
We will remain on the lookout for you!