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Consumer Goods Subscriptions

The market for consumer goods subscriptions is growing rapidly and inspires more and more companies to offer their goods (both durables and consumables) on a subscription basis; think food, skin care, clothes, laptops and washing machines.

Subscriptions can be defined as an arrangement that facilitates the regular delivery or use of a product or service. The arrangement settles what the product/service is, frequency of usage/delivery, at what cost, and within what timeframe*.

*Source: ING

Durable goods Subscriptions

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Consumable goods Subscriptions

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Consumer goods subscriptions

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Regular delivery or long term use

How frequently should the product/service be delivered? Very frequently or should it be available for ‘long term’ use?

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Price

Should the customer pay on a time-based or usage-based model? Or on a hybrid model? What should the price level be?

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Frequency

What about the delivery frequency of the subscription ? For instance, two HelloFresh boxes per week? Or should there be a maximum usage, for instance a maximum number of kilometres for a Volvo subscription?

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Duration

Should there be a minimum or maximum contract duration? What about cancellation or renewal policies? 

B2C companies love Subscriptions

New, recurring, predictable, revenue streams.

Strategic differentiation and restrained competition.

Deeper customer relationships and more customer insights.

Bypassing intermediaries in the supply chain (higher margins).

Increased customer loyalty (lock-in effect), cross- and add-on sales.

Sustainability and second hand market potential (+ improved corporate image).

Higher company valuation

Complementary to traditional product-selling model.

Customers love Subscriptions

High quality product without paying a high purchase price.

Always a modern or up-to-date product or service.

Convenience: perfect for time-poor customers.

No risk of maintenance or repair costs.

Personalised experience: tailored to customers' needs and wants.

Exploration and discoverability of new and unique products and services.

Planet Earth loves Subscriptions

Incentive to prolong lifetime of products.

Incentive to implement end-of-life strategies (reduce, reuse, recycle).

Incentive to increase product utilisation.

Reduced raw material and energy consumption.

Incentive to design easily repairable products.

Compliance with policy makers' regulations (e.g. European Commission's Green Deal).