Subscription Services Are Here to Stay

The lockdown has accelerated the digital adoption of new trends. Read more about how subscription services are here to stay.
Cristina Quijano
May 26, 2020

Reading time 3-5 Minutes

Restrictions are starting to be eased, but because of COVID-19, consumers' behavior is changing. 

People are less concerned with keeping physical possessions and more interested in creating new experiences with flexible product purchases. The widespread lockdown has accelerated the digital adoption of trends like work-from-home (WFH), e-commerce, entertainment-as-a-service, streaming, and delivery services. 

Whether it's a music service or food delivery, more than 20 million Americans have 11 up to 21 subscriptions, while in The Netherlands, the number is around 11

From Amazon Prime to the New York Times, to Porsche Passport. Subscriptions are becoming the model where people consume and engage with their favorite brands, especially now during the pandemic. 

Netflix, for example, gained 15.7 million new subscribers in the first quarter of 2020, and is still growing in part because of COVID.

Netflix Subscription
Netflix Subscription

CEO's focus is not only focused on survival but also on how to succeed in the new digital era embraced by COVID-19. During the lockdown, consumers want convenient, easy, and customised services when it comes to managing their subscriptions and payment options. Companies need to evaluate what are the challenges of offering a subscription service, so they are better prepared to respond to customers. 

With stores being closed, retailers are experiencing many challenges, and subscription retailers are surging. There are countless options of "pay-per-month" subscription services, from makeup to bikes, or even washing machines. Even more, online advertising cost has declined, making it easier for companies to reach possible subscribers, or to engage with consumers that want to feel the 'shopping experience' but can't access to stores right now. 

Subscriptions can work for your business just like it did for Feather and HelloFresh, two companies that have grown around this business model. 

Feather website

Feather is offering customers ease of use. Customers can sign up on their platform to rent products such as bed frames, dining tables, desks, and chairs for a minimum of three months and a maximum of 1 year. As a result of the pandemic, Feather is now delivering products on customer's homes while intensifying its cleaning procedures. 

Feather products go through disinfection and refurbishing processes and taking special care to disinfect delivery vehicles. The company is also not requesting a signature; instead, they are taking pictures of the products and sending a text confirmation to customers. 

HelloFresh's strong first quarter of 2020 shows a big shift in consumer habits

HelloFresh subscription

HelloFresh offers food subscription services, where people can pick their favorite recipes and receive a box with the ingredients at home in the preferred time and frequency.  

According to CNBC, HelloFresh has achieved in the first quarter its earnings forecasted for 2020 after more people work from home due to the lockdown. The German company served more than 80 million meals, and it jumped the number of active customers to 68.4% (compared to 2019), growing its subscriber base from 2.97million to 4.18million customers in the first quarters of 2020.  

Why are the subscription products and services accelerating?

Remember the last time you went to your favorite coffee shop? 

Coffee subscription
Coffee Subscription

For most consumers, shopping is an experience. As customers, we want to be entertained, and most of us go to the stores to discover new things on the shelves or to supply a need. With most of the stores closed these days, we ask ourselves for new ways to experience that feeling of happiness every time we go to our favorite coffee shop, but how is it possible while people stay at home? 

Most of the time, the answer comes as a subscription service. Here's what I mean; more and more people are looking for ways to serve their needs now that they work from home and have limited possibilities to go out. When we unpack our favorite cup of coffee or books, it's a surprise moment, a discovery that makes us feel good. 

The lockdown is making customers more curious about subscriptions and is helping companies to reach more potential buyers. For companies to succeed with their digital customer experience, they need to have a defined customer proposition and be able to educate and communicate the potential benefits of subscribing to their product instead of buying it. 

Providing more pace and flexibility which is essential for modern consumers. 

What Does This Mean For Retailers?

Companies are constantly reinventing themselves. Think of when you do your groceries. 90% of the time, we buy the same stuff. Almost everything we buy can be sent to our home, giving us more time for the things that we enjoy the most. These products can be automatically delivered at customers' homes without any hassle. 

Retail Subscriptions
Retail subscription

As a retailer, you'll have to do some research. Understand first how much your customers are changing depending on your industry, plan on how your company will serve this new era of digital shoppers and get ready to start offering subscriptions. If you are unsure where to start, you can read our blog on five tips to get you started. 

What will happen next?

The lockdown forced people to change their societal and digital behavior. People are getting used to buying online and to experience more online shopping. What was a 'nice-to-have' is now becoming the new normal, and companies need to be prepared to embrace the change for the post-lockdown era.   

With Firmhouse, you can launch your subscription business today. Get started and book your Free Demo today. Not sure if you can start now but curious about our solution? Contact us to receive more information about how our platform can help you. 

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