Is Subscription the future of your business?
As we get more comfortable with technology, and we see a gradual shift of offline behaviour to online- Things that consumers naturally did offline are now beginning to do online. Subscription is one just behaviour that has been a part of our non-digital life from time immemorial. We’ve subscribed to newspapers, electric service, milk delivery, club memberships, gym memberships, cable TV, home/office rental and the likes.
With technology enabled services permeating into our daily lives, think about your most frequent daily actions that are turning into digital subscriptions: your daily news in the morning from ET/NYT, your gym/yoga class with Cult/FitPass, your milk delivery with DailyNinja/MilkBaskets, taking your ride to work with UberPass/Ola, watching GoT on Hotstar, your office at the co-working space, the gmail (MS Office, Adobe, and other software) you use at work, your lunch order through Swiggy Super, ordering your groceries on Amazon Prime.
It’s all through some kind of subscription!
In the B2B domain, subscription has become the norm for all software and services. Even for products- a number of hardware manufacturers now offer a pay-as-you-go subscription model, instead of paying upfront for the hardware.
Now, even in B2C, the subscription business model is becoming even more pervasive.
Below are a few examples, to show how pervasive it is becoming:
- Ecommerce: Amazon Prime, Flipkart Plus.
- Entertainment: Netflix, Hotstar. Youtube/iTunes tried pay as you go and now have moved to subscription. The DTH/cable service products were always on a subscription model.
- News: ET Prime, NYTimes, HBR, Ken, etc.
- Hospitality: Zomato Gold, Swiggy Super, etc. I think even Oyo is offering a subscription model.
- Transportation: Uber/Ola are also doing it. Zoomcar offers cars on subscription.
- Real Estate: The ‘we’ economy and the rental business. wework, welive, …
- Healthcare: Insurance, health plans, gyms, preventive health services.
- Education: Has traditionally always been this model. It’s the same with the tech enabled companies like Byjus, Unacademy.
- Monthly Subscription Boxes: Covering toys (Flintobox, MagicCrate), beauty, food, accessories, clothes, books & growing.
- Groceries: Bigbasket also has a subscription now. Your daily milk delivery was anyway a subscription, now it’s turning tech enabled.
- Consumer Goods: Your favourite companies are testing subscription models here: Nike is trying ‘shoes on subscription’ model(and from what I hear, good initial traction) Apple wants to you upgrade your devices (so might as well offer an iPhone subscription that costs $60-100 p.m. with free upgrades/replacements, instead of having to drop $1,000 each time the consumer wants to buy a new phone).
Your basic utilities and some of the oldest existing businesses already have you on a subscription model. Your electricity, water, maintenance, telecom, office/home rental, security, everything is a subscription business.
The new age companies seem to just be catching up with it now! Now instead of watching renting one movie at a time, you can watch as many as you want.
It’s not that these new companies weren’t aware of this model, it’s just that these digital economy enabled businesses need to go through a phase of evolution, adoption, business model development, infrastructure building, and other factors before you can move into this model (covered later in the article).
If you think about the evolution of digital economy enabled businesses, they’ve gone through 4 phases:
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