I was stuck at this for hours. But apparently solution is more easier than I had expected.
I don’t have to create new theme for the subsite.
To make subsite homepage show blog posts instead of custom front-page.php, I went to Settings > Reading and selected static page and set posts page to “Blog” and left homepage with nothing selected.
To enable plugin management for individual sites, I went to Network Settings and checked “Enable administrations menus”.
Now I can manage plugin for the subsite without have to add any specific codes to functions.php.
Since Woocommerce is going to be disabled in the subsite, only change I had to make is to update sections of code in the theme that is relying on woocommerce functions ( such as title section in header.php ) to check if Woocommerce is active.