‘E-commerce subscriptions are about stability and predictability for consumers’: Behind Recharge’s recent growth
- As more consumers started subscribing to various purchases during the pandemic, Recharge saw its own growth in revenue.
- But are subscription services enough to stand on as a payments company?

Covid has reshaped shopping, not only in terms of going online to buy stuff, but also in terms of how consumers go about these purchases.
The Amazon-minted one-click buy is not the only thing that’s in vogue, it seems. The subscribe button is clicking with consumers more than ever.
In just under a decade, subscription business revenue grew by 437%, according to a survey by Zuora, a subscription software provider. The global subscription e-commerce market is estimated to reach a market size of $478 billion by 2025, growing at a CAGR of 68% during the forecast period 2019-2025, according to a report by WiseGuy Research Consultants.
When there are so many unknowns floating around, people may seek comfort in brands they already recognize and trust. That whole sense of serendipity you have when you go to a physical store is sort of lost in an online setting, And in that case, consumers may just be looking for a shortcut to get to the products they know and trust. Subscriptions can act as a solution.
“A time of enormous uncertainty may be leading people to value the stability and predictability of finding something they love and knowing they can count on its arrival on a regular basis,” said Stephanie Lemmerman, CFO of Recharge, a company that provides ecommerce subscription solutions.
Recharge was founded in 2014 with the goal to help Shopify merchants keep consumer interest even after a transaction was made. This led to the idea of a subscription product. Today, merchants can use Recharge to offer consumers a choice to make a recurring purchase. The software is designed to be pretty flexible. Some examples include monthly delivery of a pet food brand or a bimonthly shipment of 18 bars of caffeinated snacks.
One thing Recharge enables is consumers’ ability to adjust their subscription in real-time, including skipping or delaying shipments, and swapping products altogether. Oatly is one of Recharge’s customers. The merchant creates different oat drinks that act as substitutes for milk. Since oat milk isn’t at staple product level the way milk is, a service like this could help keep customers recurring -- specifically those that might not have access to the product in their local grocery stores.
Recharge’s software allows Oatly’s customers to choose how many times a month they want a delivery to be made and gives an option to pause, adjust, or cancel the subscription.
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The subscription set up process for merchants is also designed to be pretty easy. Recharge’s website claims it only takes minutes. Merchants also get analytics features which help them gauge how well their business is doing.
On the consumer side, customers can manage their subscriptions through texting. Users can text Recharge SMS to change anything that has to do with their subscriptions, including making one-time changes to an order. There’s also a customer portal, where merchants’ subscribers can log in and choose what they want their subscription package to look like through prebuilt templates.
As of May, Recharge says it serves 15,000 merchants and enables subscriptions for 35 million customers.
Recharge earns revenue by taking 1% + 10 cents of every transaction. Its standard account is free, while its Pro account costs $300 per month. The Pro account includes a customizable shopper portal, which lets merchants decide what the subscription service will look like to the customer. There are also more specific analytics features. Examples include the ability to see product SKU levels, which helps the merchant figure out which product is selling best, and media attribution, which lets merchants see how customers are getting to the site.
Recharge saw some significant growth last year, including an overall merchant subscriber growth of 91%, and its own revenue growth of 136%. Through its series B funding, the startup raised $227 million, which valued the company at $2.1 billion.
Merchants’ subscription growth is not just appearing in typical categories, like content streaming. Some of the biggest sector growth Recharge has experienced came from unexpected sources, according to Lemmerman. Merchants falling into beauty and care product categories, for instance, saw subscription growth of around 120%. Food & beverage merchants saw subscription growth of 100%. Pet food companies saw the biggest increase in subscribers at 147%.
But even if the subscription payment model starts cartwheeling into different industries, Recharge still has some challenges ahead.
For one, Recharge’s success as a business is tied to that of the merchants it services. And in that case, the startup is sort of in a race with competitors to get to the most promising businesses first. That can be tricky, since it can sometimes be a bit of a luck of the draw scenario, as well.
Take Recharge’s direct competitor Zuora. Zuora is a subscription service that became a unicorn back in 2018. Zoom is among the merchants the company serves. The video conferencing tool started implementing the software in 2015.
In its fiscal 2021 Q4 earnings report, Zuora reported that it saw a total revenue increase of 13% year-over-year. Like Recharge, Zuora makes money off of subscriptions and transactions. Its subscription revenue was $65 million -- a 19% YoY increase.
Another question is whether subscription software is enough to stand on as a payments company. Stripe, PayPal, Square, and others all provide subscription payments as just one thing on their payments menu.
Recharge may need to think about scaling its services to stay competitive. Recently, the startup rebranded itself from ReCharge to Recharge, which could hint at a goal to eventually add more services.
“Our original branding spoke just to the literal nature of recurring transactions,” said Shan Miller, creative director of Recharge. “Recharge enables more than that - we help turn those transactions into valuable long-term customer relationships.”