In recent years, more and more people are using e-commerce as well as the subscription model. Companies are constantly developing their offerings and services. Digital payments are clearly helping to move the world forward.
The latter must now adapt not only their range of products and services, but also the payment methods offered and their data protection policies. Customs has changed, now consumers only want to pay for what they consume. So is the “subscription” model relevant?
Why own when I can subscribe?
Today’s consumers are aware, responsible and engaged. They are more looking for an application that meets a specific need, rather than actual ownership of the product. Gone are the days when their relationship with a company was a one-time deal.
Widely adopted by established players such as Deezer, Netflix, Spotify and others, the subscription concept offers unprecedented freedom: the freedom to use the service anywhere, anytime.
Indeed, a true subscription economy has emerged. Of all the business models we know of, the subscription-based model has shown the strongest growth in recent years. But this model is not for everyone, and not all companies are ready to accept it.
Today, consumers want to buy goods and services on their own, in a flexible and flexible way. Thus, the same subscription category is not enough to be liked and liked again in the same way by everyone. When it comes to shopping behavior, we have entered a new era that requires a different user-centric business model.
Subscriptions like Netflix: a business model that suits everyone?
The business model based on online subscription is certainly very reliable. In France alone, there were about 50 million active subscriptions in 2021, representing almost 9% of the European market. The French market has already passed the €5 billion mark and is expected to double by 2025.
Exclusive access, immediate product or service availability… The subscription business model is designed to offer consumers a long-term customer experience that benefits both buyers and sellers. Merchants, on the other hand, benefit from a constant stream of payments and thus can predict their annual income.
One by one, industries that were previously far from the subscription business model are moving to it. The British restaurant chain Prêt À Manger and its drink subscription, or Maison de la Literie in France, offering bed and mattress subscriptions, are very specific examples.
The subscription fee offers the option to “order once, use many times”. However, the main problem with this model is that it is as easy to subscribe to a service as it is to cancel it. The number of available offers and services, becoming more and more, leads to a significant loss of customers for sellers. In addition, the subscription-based business model assigns the same needs, habits, and behaviors to all consumers. However, we are all different in the way we consume: purchase frequency, quantity, variable quantity, different and varied ways…
The iterative economy: an economic model for new tech-savvy consumers?
Customer loyalty remains a living war for any trader. Unfortunately, in recent years, attracting customers has become more and more expensive, and this is no longer enough to ensure the growth of players. Over the past six years, this cost has increased by about 60%. Marketing has become much more expensive, and customers are much less loyal to brands than before.
As service offerings become more personalized and customizable to meet consumer needs and desires, the subscription-based model is showing its limitations.
Indeed, consumers have never been so demanding. They want to have access to a service or product that meets their exact needs, when they want it, no more and no less.
Consumers expect brands to provide products and services to them repeatedly, but without contracts, restrictions or conditions. This is where the concept of the repeat economy or repetitive purchases comes into play. This strategy allows sellers to focus their efforts and costs on satisfying their customers. The repeat economy, a new economic model, allows merchants to maintain strong relationships with their customers whether they order once or multiple times on their platforms. There are no restrictions on the number, volume of purchases or seasonality in Repeat Economy.
Uber and Amazon were the first to embrace the idea. You don’t need to subscribe to hit the road or make a purchase – when you need it. In fact, the most important thing for the customer is the ability to satisfy their needs with one click, without having to enter their personal or payment information every time thanks to the ultra-smooth payment process.
To facilitate these recurring purchases, the customer journey must be omnichannel, secure, and hassle-free. The payment process should be as simple as possible, offering the desired product at the exact moment when it is needed.
Indeed, payment is a defining element of the shopping experience. If the experience is not smooth, customers are more likely to abandon their cart. In 2020 alone, failed payments cost the global economy $118.5 billion.
Therefore, merchants need a secure, stable and scalable payment platform to reduce the number of failed transactions and thus increase customer loyalty. Digital transformation is necessary to always stay as close as possible to the buying habits of consumers. The repeat economy promises great progress, improved customer experience, and more than satisfied customers.