Subscription based services have been around for a very long time. Newspapers and magazines are two examples of subscription based services that have been around since the advent of the printing press. This business model has grown to include anything from DVD’s to streaming services to clothes, and now it seems like the subscription based service model is becoming more and more popular. Companies offer subscription based services for anything from meals to crystals. What makes the subscription based services so popular, and why do some claim it is only a matter of time before they take over completely?
If you don’t think subscription based services are growing, you’d be wrong. In April 2017, subscription company websites had about 37 million visitors, which is an 800% growth since 2014. So why are subscription based services growing in popularity? One of the answers is convenience. “People are busy and want to automate as much of their lives as possible, it’s as simple as that” says Agam Berry, the co-founder of Quantified Commerce, a company focused on building e-commerce brands in India, “would you rather go to the store every month for razors or just have them show up at your door?”
Customer convenience may be the biggest reason why subscription based companies are becoming all the rage, but it seems like customers aren’t the only ones who are benefiting from the convenience of a subscription based service. “Companies who run a subscription based service don’t have to spend on customer acquisition every month and have predictable sales,” said Berry, “that means they can spend more on the product and hold less inventory, which allows them to be more efficient and deliver better value.”
That’s not the only way that companies benefit from running a subscription based service. If your company is based on the internet there is no need to pay retail employees or managers and there is obviously no need to rent space. This not only saves money in the long by being able to spend less on overhead, but it also allows these brands to focus themselves on selling one type of niche product. John Fetto of Hitwise presented at the recent Subscription Summit in Austin, Texas, and he said “Personalization is key.” and being an internet savvy brand you’re able to target your customers more directly, and give them exactly what they want, while using low overhead to justify a lack of diversity in your products.
This niche type of marketing is further compounded by the rise of Facebook as an advertising tool. Companies are able to target their specific products to customers who would want them delivered to their door. Before this you couldn’t imagine a company delivering just crystals to someone’s door, but because companies have a lower overhead, and are able to find their customers online, you are able to target the people who want crystals delivered to their door directly through Facebook.
What does this mean for India? Well, India’s middle class is growing, and e-commerce is becoming the next hot market to enter. This means that there is a wide open market to take advantage of subscription based services, and as internet usage skyrockets across the country it only makes sense for similar models of subscription based services that have become common in the United States to take place in India as well. Not only that, but it would be even more convenient for Indians to have the choice of subscribing to have necessary items delivered to their doors. The infrastructure in India is crumbling, and sometimes going to the market means being stuck in traffic for hours, but subscription based services would make that a thing of the past.
Agam Berry the co-founder of Quantified Commerce, a company focused on building e-commerce brands in India about the future of subscription based services in India about the future of subscription based services in India. “We are looking into subscription based services in India,” said Berry, “but since most e-commerce transactions are cash-on-delivery, it is something that will happen as a larger percentage of transactions move to digital and the usage of mobile wallets and credit cards for ecommerce rises. We think it would be extremely successful in India though and it is the future.”
It may be a while until we’re having everything we need to live our lives delivered directly to our doors, but as the internet becomes more pervasive and customers begin to value convenience over anything else, there may come a day when you open your door, look down, and find a box filled with everything you need.
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