July 3, 2019

SUBSCRIPTION MODELS AT THE FOREFRONT OF SUSTAINABILITY AND REDUCING LANDFILL

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The subscription e-commerce market is booming and has seen annual growth of more than 100% year on year over the past eight years. Estimated to be worth $5.6b[1] in 2017 and continuing to grow dramatically.

But why should consumers make the switch from the “product economy” to the “subscription economy”, and is it really worth it?

Now, subscriptions are hardly revolutionary. We have been paying monthly subscriptions for pay TV, our mobile phones, and our utilities for years.
Most people with a smartphone would be making a recurring payment for at least one or a combination of newspapers, magazines, music-streaming, video-streaming, cloud storage, and of course, the phone itself. In the digital world almost every application is purchased through a subscription model.

The ease and convenience for the consumer in the physical subscription market has seen a rise in the use of the model, with the likes of Dollar Shave Club, Birchbox, Hello Fresh and Marley Spoon all becoming household names.

Gary Mortimer, an associate professor from QUT Business School, says the relationship between subscription retailers and consumers is symbiotic.

“Those types of staple products that we always need and always tend to run out of work really well as a subscription service … it just turns up at the door,” Dr Mortimer says.

Plus – with a major sustainability problem in the fashion industry gathering greater attention/focus, consumers really need to modernise their relationships with shopping and purchasing essentials.

By using a subscription service, the consumer is able to select their delivery frequency  and modify or suspend their subscription once their needs are met. This reduces the likelihood of being overwhelmed by choice and making gratuitous purchases under pressure, that often end up in landfill later (85% of textiles in Australia do).

And whilst this is probably not the key driver for subscription based brands, this model allows them to forecast more efficiently and cut overproduction, whilst maintaining a primary focus on customer satisfaction. This focus ensures that the consumer is considered at every step of the journey, from design all the way through to controlled distribution. And ultimately, that leads to a much better customer experience.

So next time your top drawer needs a refresh, why not consider a subscription?

[1] https://fuelbymckinsey.com/article/sizing-up-the-subscription-e-commerce-market

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