In today's digital age, technology has invaded every facet of our everyday lives. It has changed the way we do everything, from traveling, to communication, to working, to shopping. Especially in the wake of the pandemic, technology that has the power to make operations more efficient has risen to the top. One of these efficient business models that has gained extreme popularity in recent years is the subscription service model. Research shows that subscription services have taken the United States by storm. Some are even growing almost four times faster than companies in the S&P 500. In the United States alone, there are well over 200 million subscriptions belonging to over 60 million subscribers. Averaging to about four subscriptions per person, no wonder this model is as popular as it is.
There are a variety of different types of subscription services that both individuals and businesses can take advantage of. The majority of active subscriptions today are curated, meaning that they include media, boxes, or physical products. Some examples of these are Birchbox, Barbbox, or Fabfitfun, all of which offer a special item or package to the consumer. Another popular form of subscription services are for replenishment purposes. These include groceries, office or home supplies, and even toiletries. Amazon is a leading provider of these subscriptions, but others like Lexmark and Dollar Shave Club are amongst the most popular as well. Membership access is another type of subscription service that includes membership perks and other free goods. Sam's Club, Amazon, Best Buy, Nike, and Instacart dominate this sector of subscriptions, regularly providing subscribers with exclusive deals.
Each state across the U.S. has their subscription service that they are most interested in. For example, states like Alabama, Maine, and Mississippi are most interested in makeup related subscriptions, while Alaska and Kentucky prefer snack food subscriptions. The choices are endless when it comes to deciding what and who to subscribe to, leaving all power in the hands of the user. It is for these reasons among others that this business model has found so much success and continues to grow. Subscription services are convenient, simple, and engaging for consumers, business owners, and operators alike.
Because of how popularity skyrocketed, many researchers began to wonder exactly why consumers and business owners were choosing to buy into subscription models. Some users admit that it is because of the affordable convenience of them. About 14% say it's because they are cost effective, but almost 23% of U.S. consumers admit that they use subscriptions for convenience. Usage based pricing is also a deciding factor. Many replenishment subscriptions help users get items when they need them, not just every month.
Studies have also shown that younger generations are more likely to subscribe to digital and physical subscription services. This change in demographic has affected who buys into different subscription services and which services they take advantage of. COVID-19 was an obvious catalyst for subscription service popularity, as people lost the ability to receive goods through normal channels. This boosted consumer interest in subscription based-services, growing businesses of this nature by nearly 12%. Finally, some consumers reveal that subscription services are just plain fun. Many subscribers agree that it is fun to receive goods at the doorstep, adding a layer of enjoyment alongside the function.
As the subscription industry continues to grow, many industries are getting into offering subscriptions for the first time. No matter the interest, there is now a subscription out there for everyone. Plant lovers can now have new houseplants delivered to their homes every month. Science enthusiasts can purchase brand specific merchandise and discover new accessories through this model. Even businesses can have printer ink and other office supplies dropped off, saving up to 50% on toner costs and other expenses.
There are a number of services looking to capitalize on the omnipresence of subscriptions, further developing this model to be as efficient as possible. There are new emerging ways to track subscriptions, both from the user end and the provider end. These metrics will enhance user experience and will ensure that the upward growth of subscription services we see today is sustained. Despite inevitable change, it is clear that the beloved subscription model is here to stay.
