It is a very healthy business model. Since repeated transactions are kind of guaranteed to happen, the company could spend confidently on acquiring new customers. They don't have to spend time and again on the same customer to acquire newer transactions from them.<p>Here is how most non-subscription based e-commerce companies today work:
The company shows some traction, gets good funding, acquires customers at a cost higher than the value of the current transaction, with the hope that the customer would later come back to buy more, and the company could recover the acquisition cost over time, and make profits. But every other competitor in the space is doing the same, and the customers have multiple places to buy from. So, the company ends up acquiring the same customer time and again, and all these costs get added up to the customer acquisition cost. But in the early stages, the lifetime value of the customer wouldn't be evident, and the company might end up spending lot more than the lifetime value to acquire transactions in the short term.<p>This problem doesn't happen with subscription based e-commerce companies, as long as they provide a good service and are able to retain the subscriptions. They could pay for advertisements on a cost per acquisition model, and count only new customer acquisitions, and subscription upgrades are conversions. This way their customer acquisition cost would be constant and under control.<p>Here are some of the areas where subscription based e-commerce would work well:
1) Groceries, fruits and vegetables
2) Cosmetics and sanitary products - Facial creams, lipsticks, skin care products, after shave lotion, shaving foam, kitchen napkins, toilet papers, sanitary napkins & tampons, condoms, cleaning agents, detergents, etc.
3) Baby products - diapers, baby oil, talc, etc.
4) Medicines - Diabetic, blood pressure control, cancer drugs, etc. - But there are regulatory concerns here
5) Undergarments, socks, etc.<p>Most of this is already being done by some company or the other.