As Internet access becomes a more and more indispensible commodity, new ways of doing business have also emerged. As a society, we’ve experienced ecommerce boom and on-the-go shopping with mobile apps. As Internet usage grows, it’s logical to think that the focus of online businesses would be on increasing the volume of transactions proportional to the number of online shoppers. However, the exact opposite seems to be unfolding: innovative businesses are leaning more towards fewer transactions.
It seems counter-intuitive, yet it makes perfect sense. By abandoning the traditional retail model and shifting towards a subscription-based system, companies are reaping benefits that have not existed in the past. Pioneers such as Netflx, the Dollar Shave Club, Salesforce and Menguin have all captured large chunks of their markets en route to exponential valuation.
What is the Subscription Business Model?
The subscription model is hardly a new concept. At its core, the model is about having people commit to pre-buying products which will be released or accessed periodically. It makes sense to the buyer due to the elimination of hassles and the lower cost of subscription compared to the accumulation of single purchases. To the seller, the model works because of the certainty of multiple purchases over a period of time.
