Most online stores are open to the public. Anyone can buy from them and the same products are available to every user. However, there are a lot of online stores that you won’t hear about unless you’re in the inner circle. Members-only stores are everywhere and they can be incredibly lucrative depending on what kind of customers you serve.
In this article, we’ll talk about how members-only stores work. Then, we’ll discuss some reasons to create a store that’s not open to the public. Let’s get started!
What Are Members-Only Stores?
A lot of online stores require you to sign up for an account before you can make a purchase. However, these stores don’t restrict membership in any way. You can create an account anytime you like and proceed to make a purchase, all in a matter of minutes.
Members-only stores are more selective. Typically, you can apply for an account at any time, but an administrator has to approve it before you can start making purchases. In some cases, you won’t even have access to the store’s inventory before you become a member.
This type of store tends to focus on a specific category of items. For example, if you’re a wholesaler, there are a lot of stores dedicated to helping you source products. However, a lot of them will want to vet you as a customer before giving you access to their inventory:
Members-only stores tend to cater to a very specific clientele. Customers flock to these stores for products or deals they can’t find elsewhere, which means you have a lot of advantages over traditional e-commerce ventures.
3 Reasons to Create a Members-Only Store
Most online stores try to appeal to as many customers as possible. Members-only stores, on the other hand, thrive on exclusivity. That can seem counterintuitive, but it’s a model that works for a lot of online retailers.
Let’s look at a few reasons why you might want to create a members-only store.
1. It’s Easier to Get Return Customers
One of the core aspects of members-only stores is that it’s easier to build brand loyalty. Buyers will need to apply for membership in order to get access to special privileges, like discounts and offers.
One great example of a members-only store is Nike Members. Getting accepted as a member means you get access to a private shop with unique deals.
On top of that, you get perks such as free shipping and invitations to special events:
One fantastic aspect of membership programs is that once you’re in, you’re much more likely to keep an eye out for new products and deals. This is particularly true if you’re paying for the membership like you do with Amazon Prime.
Higher customer retention rates tend to make members-only stores more profitable. That’s because returning customers tend to spend a lot more money than new ones.
On average, a 5% increase in return buyers translates to an increase in revenue of 25-29. Loyal customers spend about 67% more at stores than new ones.
Clearly, memberships are a powerful customer retention tool. However, if you want to maximize benefits and get as much repeat business as possible, you’ll need to offer perks or hooks to keep users coming back.
2. You Can Command Higher Product Margins
A significant part of any store’s revenue depends on its profit margins. Most stores can’t raise their margins too much because of competitors. If you offer the same products as every other store in the same niche but at higher prices, most shoppers will likely flock to your competitors.
Members-only stores tend to be in the unique position of offering exclusive products and services. Typically, users become members because they can gain access to products that no other store offers. This means you have more latitude when it comes to setting profit margins for products:
The industry standard in e-commerce puts profit margins at around 10%, with 20% being in the high end. A members-only store can command prices in that high-end area. This means more direct profit for you or more revenue that you can put back into the business.
Keep in mind that customers of a members-only store tend to be very savvy. They often have a pretty good idea of how much products and services should cost. Attempting to raise prices by a significant percentage can drive customers away and reduce the rate of return purchases.
3. Spend Less on Marketing
A lot of members-only stores don’t market themselves in the same way that other shops do. If you’re targeting a very selective group of customers, they’re more likely to hear about the store from other people, or in hobbyist and specialty forums.
This means that it may take longer to build a clientele, depending on how aggressive you are about getting the word out. However, it also translates to less time and money spent on content marketing, direct ads, and even social media outreach.
With less effort spent on marketing, you’re free to focus on other aspects of your business. You can put a more personal touch on customer service, source new products, improve the store’s user experience, and much more.
Conclusion
As the name implies, members-only stores tend to be very selective about their clientele. People who buy from these stores tend to look for products or services they can’t find elsewhere. As the owner, that means it’s much easier to get return customers and you can typically charge a premium for your products.
Do you have any questions about running a members-only store? Let us know in the comments section below!
Image credit: Pixabay.