Subscription models are taking over

 

Subscription models are taking over

Think about it, from groceries, to mobility, including entertainment, all industries are slowly switching to a subscription model.

You come home with a Uber after a drink with friends, open the door, pick up your Hello Fresh box and then climb up the stairs, you sit down in your sofa and read your favorite newspaper. You then switch on Netflix to watch an episode of La Casa De Papel. You may not have noticed, but you’re now a proud member of the subscription economy.

The subscription business is sky-rocketing. The market has grown by more than 100% per year, ramping up from a shy $57 million in sales in 2011 to an astonishing $2.6 billion in 2016. You may not be familiar with market numbers, but you will understand that this type of growth is unusual.

There is no question about the fact that the subscription model is the way of the future. No matter your industry, if you’re not shifting to this business model now, chances are that in a few years you might not have any business left to shift. It’s not about the physical product you sell; it’s about what the customer is trying to do. And that inversion of thinking is at the root of everything. All industries should start thinking about this even if it seems unthinkable. Take cement as an example, you realize that flooring is the actual need. There’s a whole revolution of industrial carpets now. There’s a service contract, you simply pay some monthly fee plus overages, usage, etc. So you can actually subscribe to a floor. Many industries are experiencing this change: travel , fashion (justFab, AdoreMe), groceries (Kazidomi, Hello Fresh), mobility (Drive Now), personal care (Dollar Shave Club), etc.

One of the very precursor of this approach is Adobe, they provided a “textbook” to inspire others to switch to a subscription model. They were heavily criticized because they were letting go immediate revenues in the hope of getting more future cash flows. Their revenues dropped drastically after the transition to subscription, but then enabled them to sustain their business over the long term.

If you think about it, it’s a healthy dynamic between the vendor and the customer as vendors are incentivized to continue delivering the best services to keep customers happy and it gives tremendous negotiation power to customers.

At Kazidomi, we understand that this new business model can drastically change the way people consumer products and it can solve two major issues in the grocery business: access and price. As a result, we can offer cheaper products to people who can’t afford it otherwise and help them live healthier and more respectfully of the environment. Additionally, the curation of the products and the strict selection offers people a chance to discover the latest trends and brands that are emerging on the market. It’s not only about the money, it’s about the experience, it’s about being part of a community sharing the same values.

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