Retail

How Subscription Services Are Steering Consumers Away From Owning Possessions

Subscription Model: From Ownership to On-Demand

To help consumers save on the costs of owning possessions, companies are offering more goods and services on demand with the subscription business model, long associated with periodicals and brought into the modern age with Netflix.

The success of innovators is presumably part of what influenced Lyft to launch a new subscription plan earlier this month. With the All-Access Plan, passengers pay a monthly fee to lock in a price of up to $15 per ride. The ridesharing service also offers subscribers a discount on additional rides.

Beyond ride-hailing, other companies are taking their first steps into the subscription realm, according to the PYMNTS Subscription Commerce Tracker, while others are expanding existing subscription services to reach a broader consumer base. From medicine to fitness and clothing to software, businesses across a diverse range of industries are taking the subscription model for a spin.

The projected value of the global digital health market by 2025 is $536.6 billion. Subscription medicine is not a new concept – the first model debuted in the Pacific Northwest in the 1990s. Today, these services are available in several price tiers, from basic direct primary care to a “luxury concierge” offering. The potential benefits are similar to those of many consumer-focused subscriptions. A patient-specific subscription can help users better understand their health needs and make more informed, cost-focused choices. Subscription medicine offers on-demand access to doctors the way top subscription services, like Netflix and Hulu, offer access through their platforms.

The anticipated CAGR of the global digital fitness market from 2017 to 2022 is 32.6 percent. In the early days, Aaptiv offered two options: Customers could take live classes a la carte for $5 a shot, or they could access an archive of live classes via a subscription. Aaptiv Founder and CEO Ethan Agarwal told PYMNTS in an interview over the summer that he and his team quickly saw that the on-demand subscription was the much more popular alternative, and doubled down on a wider catalog of fitness training content. Today, with Aaptiv, most members opt for a single annual fee to explore a variety of fitness options, as well as the interplay between various workout types. Aaptiv also has a monthly billing plan.

The estimated value of the U.K. subscription box market by 2022 is $1.32 billion. Stitch Fix recently announced its plan to expand its personal shopping service into the United Kingdom, it was reported in October. While shoppers across the pond will have to wait until the end of fiscal year 2019 to take advantage of the site, customers can now sign up online to join the company’s wait list. “We believe our ability to create a uniquely personalized shopping experience is something that will resonate with consumers and brands outside of the United States,” Stitch Fix Founder and CEO Katrina Lake told Chain Store Age. “We can’t wait to show our first U.K. clients how effortless, convenient and fun Stitch Fix is.” This past year, the company launched Stitch Fix Kids, a way for parents to shop for their children without the required subscription or membership.

The share of IT professionals who believe almost all apps will be operating as Software-as-a-Service by 2020 is 73 percent. Apple, for instance, announced earlier this year that it was restructuring the subscription fee program for its Texture digital magazine subscription service that it acquired in March. Previously, Texture was a two-tiered membership model with a monthly basic plan and monthly unlimited premium plan. The difference between the plans was access to weekly issue magazines. Texture has since dropped the lower tier entirely and reduced the price of the unlimited premium plan. Customers will now have access to all of Texture’s offerings for one monthly fee.

The estimated projected number of Amazon Prime subscribers in the U.S. by 2029 is 275 million. Amazon’s Prime subscription business is expected to more than double in the next 10 years, hitting 275 million subscribers in the U.S. alone, per Citigroup estimates. CNBC, citing Citigroup analysts, reported that the Wall Street firm argued in a research report – in which it raised its price target on the stock – that the rest of Wall Street doesn’t appreciate the full value of Prime, and that the company could enjoy more than $500 billion in Prime gross sales each year within a decade. Citi Analyst Mark May wrote in a note covered by CNBC, “We remain positive on Amazon shares, and view Amazon‘s large and growing global Prime member base as not only a source of recurring revenue, but a key reason why brands and third-party sellers are increasingly relying on Amazon’s marketplace.”

When it comes to the Lyft ridesharing subscription, the company noted in a blog post that consumers can use their service instead of owning a car. The suggestion is that a subscription can help turn material possessions – such as that car in the driveway – into a less costly, on-demand service.

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