The change in consumer habits, subscription models.

In these brief lines I want to comment the importance and growth of subscription models, which that drives to ask the following question:

Could it be the end of private ownership?

I know that this question sounds very “radical” at first glance but I will comment different evidences to reinforce the importance of subscriptions; these evidences are very “new” and some years ago would have been completely unthinkable… for instance:

• The increase of the shared economy in the mobility sector. Companies such as Uber, BlaBla Car, eCooltra, Lime, Car to Go and many others have not stopped growing in the recent years. “Coincidentally” If we ask the younger generations (millennials) if it is completely necessary to have their own vehicle, probably a big part of them would say no. A car is very expensive because of maintenance, insurance and other expenses and is not an asset at all because it loses value just at the moment we buy it. Check the following video of Kevin O’Leary to understand why not to buy a car nowadays.
• Netflix, Amazon video, HBO, Spotify, iTunes… all these companies are fighting to be the winners in a previously unthinkable subscription model. People no longer want to have their own movies, favorite series or songs, they rather to pay a monthly fee to have all the movies and songs in the world just in “one click”. Again, we see that we are not interested in owning stuff, but consume it in real time.
• Dollar Shave Club, an American company that send razors, toothbrushes and other care complements in a periodic way to your house.
• Etc.

Now, I will explain my favorite example of how subscriptions apply to one of the most important car manufacturers in the world.

Audi, has created a subscription model thinking about the new consumption habits and new market needs that I was commenting before.

The german company, one of the top car manufacturers and a very sophisticated organization in terms of marketing, brand building and consumer habits; has realized about this new market trend. Therefore, they are adapting part of their offer to this type of consumers with a new project called Audi Select.

Basically, consist of a service with which by paying 1.395$ per month you have 5 car models available to use. None of those cars will be yours but you will be able to pick whichever you want and you will save on insurance, reparations, maintenance, etc.

Think about all the possibilities that Audi Select is offering… Imagine in January you want to go to the mountain, then you can pick a tall car such as the Q7. On the other hand, if you have a long street-trip you can pick a comfortable A5.

This innovative way of subscription that Audi has created is a real success in terms of business vision. Precisely all car companies, are currently very focused on developing models of fully electric cars. However, Audi has not lost the perspective of the reality around them (they have just launched the new full-electric Audi called e-Tron) and at the same time, They have been able to see in which direction is the market going (subscription model) and they have adapted their value proposition before any other brand.

To sum up,

Subscription models are more present in our day-to-day life and definitely are going to affect how businesses offer their value proposition to consumers. Also, a business based on subscriptions, is going to have a very important component which is recurrence. These key concept means that the business will receive a very stable amount of money every month. This is not only good for the cash flow but also to forecast the future income that the company will make.

Regarding the question at the beginning of this post, Could it be the end of private Ownership? I don’t believe that the answer is yes or no, because I think that as human beings We always want to have some own property. But I do believe that in the near future We will consume the majority of products and services through a Subscription model.

Read more here.

Diego Gaminde Montesino Espartero, Digital Marketing professional.