The End of Ownership
One of the growing tendencies we are experiencing in modern culture is the steady shift towards preferring to access products, rather than buying them.
57% of international adults wish they could own less “stuff”.
The era of ownership seems to be dying, and it puts the traditional concepts of materialism and consumerism into disarray. However, a whole new influx of subscription-based business models, utilizing the huge potential of not owning, shows us what benefits we may ultimately gain from sharing more collectively.
68% of international adults believe that a person’s status is no longer defined by what they own.
Consumer expectations have changed over the last years, and the idea that someone’s status is defined by what they own seems completely old-school nowadays. Ownership of a house, car, bicycle, furniture, etc. requires attention, time spent on repairs and upkeep, and it still doesn’t save you from the natural obsolescence of them. These are also tasks and restrictions that modern individuals feel encumbered by, as most people do not want to deal with maintaining their stuff or committing big upfront costs to things that they may not want in a few years. In fact, many are even turned off by the pressure of having to buy new things or be up to date with the newest car, phone, computer, clothes, and furniture. Life today should be about experiences.
70% of international adults agree that subscribing to products and services frees people from the burden of ownership (e.g., maintenance, clutter, declining value).
Millennials, in particular, have a strong need for unique experiences and finding new ways to develop oneself as a person, so removing unnecessary obligations or ties has become something they are more than willing to pay for. This is where we can see the formation of a new (access) economy, because instead of buying or owning houses, cars, furniture, and clothes, you can instead gain access to better products for the time you need them and no more, simply through different subscription services.
74% of international adults believe that in the future, people will subscribe to more services and own less physical goods.
Just two years from now, 34% of international adults believe that they will be taking advantage of many more subscription services.
Modern generations are no longer content with settling for anything less than the best and latest products and the newest tech. They want flexible payments and pricing options, the ability to customize their own packaged solutions, and the freedom to put services on hold.
It is not only customers, who are benefitting from this trend, but businesses are also seeing enormous growth by reacting to the change in customer demand for flexible offerings. Innovative business models with recurring payments are seen in a lot of major industries like clothing, food, and manufacturing, which is paving the way for a new type of consumerism.
According to the Subscription Economy Index (SEI) from Zuora, subscription companies from Europe, North America, and Asia have over the past seven years seen their sales grow by more than 300%.
The Subscription Economy Index is showing an 18% compound annual growth rate, which is about five times more than the US Retail Sales Index and the S&P 500 Index.
Businesses have much to gain from the subscription economy, and while the shift changes from ownership to subscription services, the products themselves are no longer one-time transactions and interactions, but instead, companies will have to define their own way to win over their customers repeatedly, gaining their trust and loyalty for a long life-time value (LTV). It is no longer enough to create good products, but the race to keep improving such products is equally important if not more important, so the customers can experience and re-experience the value of the service, every time they use it. Only such continued commitment can sustain a lasting relationship between businesses and their customers, making a long-term sustainable growth possible.
The new [blank]-as-a-service business models are undoubtedly one of the most challenging, yet most important aspects, that especially traditional companies may need to consider these days, when establishing a future-proof business. And besides being better at competing and succeeding in this growing economy, it may also prove beneficial to the environment, as the sharing, subscription, and access economies may provide interesting new ideas and paths for a more sustainable future.