CEOWORLD magazine - Latest - CEO Advisory - The Rise of the Subscription Model for Your Business

CEO Advisory

The Rise of the Subscription Model for Your Business

The COVID-19 pandemic forever changed the way that our society operates. From the way we travel, to the way we communicate, work, and even shop, our lives were turned upside down in 2020. During that unprecedented time, many businesses had to adapt to our inability to gather, switching to a more remote business model. With this switch to remote, the popularity of subscription services skyrocketed. Now, nearly four years after the start of the pandemic, some of these advancements have stuck, leaving many of us reliant on this technology to go about our daily lives. Subscription models are still growing at a rapid pace, taking the United States by storm.

Subscription services are growing nearly four times faster than companies in the S&P 500. There are currently 225 million subscriptions belonging to over 60 million subscribers. Some of these services operate between businesses, but others are direct to consumers. In fact, there are more than 27,000 direct to consumer subscription services that are selling straight to customers instead of a middle man. 

The most popular types of subscription services in the United States are curated subscriptions. These include types of media, boxes of items, or physical products. Common examples of curated subscription services are Fabfitfun, Barkbox, and IPSY. These subscriptions often come monthly and can include a variety of different types of products. Another popular type of subscription service is replenishment. These packages include groceries, supplies, or even toiletries. The most common provider for replenishment items is Amazon, but companies like Lexmark and Dollar Shave Club operate in a similar fashion. Finally, membership to a certain business or service is considered a subscription. These often include different perks and other freebies for consumers to take advantage of. Consumers often feel a sense of exclusivity with these memberships, making it more enticing to be subscribed to services like Amazon Prime, Sam’s Club, or Instacart.

Each state in the United States has their own most popular type of subscription service. For example, New Mexico and Oklahoma are big fans of music subscriptions, while Michigan and New York are more into news and journalism subscriptions. No matter the interest area, there is a type of subscription for everyone. This variety, though, is not the only reason for the increase in popularity of subscription models. Studies have been conducted to gather consumer attitudes regarding these services and their use in everyday life. Many reveal that they indulge in subscriptions because of their affordable convenience. In fact, over 14% use subscriptions because it is cost effective, and almost 23% use they because of their convenience.

Usage based pricing is another perk that many subscriptions offer to users. For example, many replenishment services help get customers items when they need them, rather than monthly. This helps reduce waste and give the customer the control over their money and their needs. Also, there has been a general change in demographics of buyers. Research shows that younger generations are now more likely to subscribe to digital and physical subscription services. Finally, many people reveal that receiving a subscription package at the door or in the mail is just plain fun. Nearly 36% of consumers say that “getting a subscription is enjoyable” and that they are just as much about fun as they are about function.

As the subscription industry continues to grow, more unique and modern subscription themes will continue to emerge. Even today, there are a variety of niche services already in motion. For those interested, one could get a new personalized house plant delivered every month! For lovers of science, there are services available for equipment delivery and for discovering new accessories. For business executives, there are even subscription services to have supplies delivered directly to the office. For example, one can save up to 50% on toner costs and have information about printing usage delivered directly to the business via subscription service.

The way that we conduct ourselves in society was forever changed by the pandemic. We are in an age of incredible growth and rapid technological development. Much like the world around us, the services that we rely on will also continue to grow and change, which is why there are many third parties now emerging to push for the enhancement of subscription services. The future is promising for tracking subscriptions, benefitting both the consumer and the business they are buying from. Regardless of these changes, however, one thing remains certain: With such a clear and sustained upward growth in nearly every corner of the United States, there is no doubt that the subscription model is here to stay.

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CEOWORLD magazine - Latest - CEO Advisory - The Rise of the Subscription Model for Your Business
Brian Wallace
Brian Wallace is the Founder and President of NowSourcing, an industry-leading content marketing agency that makes the world's ideas simple, visual, and influential. Brian has been named a Google Small Business Advisor for 2016-present and joined the SXSW Advisory Board in 2019-present

Brian Wallace is an opinion columnist for the CEOWORLD magazine. You can follow him on LinkedIn.