Last editedSep 20212 min read
Throughout the past decade, subscription companies (i.e., businesses that send you packages on a regular basis consisting of items they’ve picked out for you) have grown considerably in popularity. From food and clothes to household goods and books, it can seem like there’s a subscription for everything. That’s borne out in the numbers, too. According to the Subscronomics Report 2021, the subscription economy will surpass $228 billion in 2021.
So, what’s driving the rise of subscription services? Why are subscription services so popular? Find out with our helpful guide.
Factors driving the rise of subscription services
There are a number of important factors behind the rise of subscription services. Most importantly, there’s price (subscription companies can offer cheaper options than major retailers), convenience (elimination of the need to visit brick-and-mortar stores for everyday items), and personalization (offerings can be tailored to the needs and preferences of each customer).
In addition to these fundamental drivers, it’s also important to consider the importance of technology. While payments services are now able to implement seamless recurring payments, making customers much more likely to sign up for a subscription service, the swiftness with which subscription businesses adapted to mobile has also facilitated significant levels of growth within the industry.
Furthermore, it’s vital to consider the fact that the tastes of online shoppers have changed in a fundamental way. Given that customers are more informed and know what they want, retailers have to offer something special to entice them into making a purchase. Subscription companies offer a level of personalization and curation that traditional retailers can’t, providing customers with a better experience and making them more likely to opt for a subscription service.
So, why are subscription services so popular? As you can see, it’s down to a number of different factors, from the changing tastes of customers to the impact of technology.
The future of subscription services
So, where is the subscription economy heading? Towards a crash, or onwards and upwards? Obviously, it’s difficult to predict the future, but according to a report from UnivDatos Market Insights, the subscription e-commerce market is projected to reach $478 billion by 2025. Having said that, it’s not going to be plain sailing for subscription companies. It’s already a volatile space, and traditional retailers are increasingly attempting to muscle in on the market share occupied by pure play subscription services. Crucially, they have the inventory and the logistics networks to do so effectively.
In any case, the rise of subscription services seems set to continue into the future, it’s just that the major players today may not be in quite so solidified a position in years to come.
Jumping on the subscription bandwagon
To take full advantage of the rise of subscription services, you may be thinking about offering a subscription service as an extension of an existing business. If you do so, there are lots of ways you can optimize your service for success. Ensure that you’re offering a personalized, curated service to provide your customers with the best possible experience of your brand. And – speaking of brands – be sure to leverage your brand to maximize your subscriber base. That way, you’re not starting from scratch.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.