For many consumers, subscribing to services like Netflix or Spotify for their video and audio needs (respectively) is like second nature. Subscription-based services have also inched their way into the sport and food industries. Now that consumers are comfortable with modern subscription-based services, which industries will be next?
According to a study conducted by ING and reported on by ecommercenews.eu, now that consumers are indeed used to subscription services, 11,000 households in 11 different countries were interviewed. ING wanted to learn if tools and toiletries are next; and find out they did.
The Plot Thickens
It wasn’t that long ago that the only things people subscribed to were newspapers and other periodicals in print form. Today, thanks to e-commerce, there are many more possibilities. Retailers have been looking to offer tangible goods, both durable and consumable, on a subscription basis for quite some time. One can already order razor blades, clothes, food or glasses from subscription services. This all begs the questions: How big is this part of the subscription economy? What potential is there?
ING found out that Europeans spend an average of €130 per month on these services. That means the subscription economy has an estimated worth of about €350 billion per year – no small chunk of change. That’s about 5% of the total household consumption in Europe.
Subscription Economy Growth
“The subscription economy will grow further, enabled by technological developments, shifting consumer preferences, favorable regulation for product design and the current low-interest rate environment”, ING concludes. The bank thinks the amount spent could grow by an additional €190 billion yearly. “There is potential for further growth: more Europeans expect to subscribe to additional tangibles than to churn [between different companies]. The potential is higher than for subscriptions to traditional services such as Internet or cable TV.”
Subscriptions In North-Western Europe Too Expensive
4 out of 10 consumers really don’t see the benifit of subscribing to tangible goods. Only 20% feel subscriptions are cheaper than buying the product(s) outright. Especially in North-western Europe, countries like Belgium, France, Germany and the Netherlands, people said subscriptions are too rigid and expensive.
Home Delivery Convenience
When consumers were asked what they value most about subscription services, the most beloved aspect was that the products are delivered to their homes, so they don’t need to leave the house. Another popular aspect is that consumers don’t need to think about buying replacement product(s) in a timely manner. Many also feel it is cheaper than buying. Only in Italy did consumers feel home delivery is not an important reason to choose a subscription.