From software to underwear, Cadillacs to commercial-free TV, there’s a new way of doing business: Subscription. While not exactly new – there’s always been a market for rented tuxedos and weekly newspapers – retailers, utility providers and tech vendors alike have started to recognise the potential – and demand – of the modus operandi.

The numbers are big. According to one estimation, the subscription e-commerce market alone has grown by more than 100 percent a year for the past five years. The largest retailers in the market are generating over US$2.6 billion in sales per year – up from the paltry US$57 million in 2011.

You can thank young companies for much of the enthusiasm – pay-as-you-go and pay monthly models are attractive to startups and small business software is increasingly seen as win/win for customer and vendor alike when purchased as a service.

“There is almost always a window where the economics are favorable for both the vendor and the customer,” says Paul Roache, Silicon Valley advisor to McKinsey.

Continue to the full article   ||  May 04, 2018   |||

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