Subscription models are one of the fastest growing forms of e-commerce sales.
Subscription models are not really a novelty, they have been around for years in a more analogical format, like the ones we used to do with newspapers, gyms, etc. The same idea has been transformed into one of the fastest growing models in platform commerce.
A Gartner study indicates that by 2023, 75% of the companies that now sell to their consumers will also offer that same sale under some type of subscription (physical products, access to platforms, etc.).
E-commerce has evolved very quickly, especially in recent years, but it is interesting to know the history of e-commerce from its beginnings. Its immediate predecessor dates back to the 1920s in the USA with catalog sales. Some companies wanted to respond to customers who wanted to shop but lived in rural areas. Stores were far away. In addition, they saw potential in other customers who wanted to shop conveniently from home (without having to travel). The expansion of the telephone as a fundamental tool for sellers, and the use of credit cards, which allowed payment without the need to be present, gave rise to new ways of doing business that were no longer just physical.
Then, with the arrival of the WWW, and in the 90s with the explosion of the .coms and the creation of Ebay and Amazon, the rise of e-commerce was unstoppable.
Since then, new online sales models have emerged (not only stores but also platforms such as Marketplace or Dropshipping) and subscription models, all in response to consumer changes and technological evolution (which is becoming faster and faster).
If we are talking about replacement products, such as printer consumables, the benefit for the customer is to always have the consumable available without having to remember it, knowing that he will receive a replacement of known quality and at a price with no surprises. For the supplier, the most obvious advantage is undoubtedly the generation of recurring revenue, which reduces its cost per sales transaction and allows it to have better stock forecasting.
The subscription sales model is designed to win more loyal customers. This is well known by printer manufacturers themselves who, like HP, have decided to go all out and, without relying directly on the channel, to gain the trust of end customers (consumers and SMEs). Although the cost of acquisition is higher than in other types of e-commerce, the value provided by the customer in the long term is much higher and more than compensates for it. An example: the sales value of the consumables used by a printer for 5 years is 5 times the sales value of the printer itself. In a scenario in which, in the short and long term, the durability of the printers is prioritized for reasons of sustainability (we are talking about the circular economy), the control of the supply of consumables consumed by the end customer is the key to the survival of businesses.
Another benefit is the greater possibility of cross-selling or upselling, offering improvements to the customer on the current service or related products or services to obtain a superior experience.
For all these reasons, it is not surprising that the value of a company is increasingly measured in terms of its number of subscribers.
Source: Paradigma Digital, Nubeprint
