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Now that we can see the light at the end of the tunnel, the question is: what’s next for the subscription economy in a post-pandemic world?
The digitalized subscription economy thrived before the pandemic and has remained surprisingly resilient during our recent times of hardship. Necessity is the mother of all invention, and so we have kept a keen eye on pandemic-inspired innovation within the digitalized subscription economy. Such innovations have provided many solutions, comforts, and conveniences as the world has navigated through these new and interesting times. As we look to the future, we can see an exciting new world of innovation in the ever-expanding realm of digitalized subscriptions and the sharing economy.
Even before the pandemic, the digitalized subscription economy catered to growing consumer demand for convenience and cost efficiency, often by eliminating the middleman and limiting reliance on brick and mortar establishments. A major industry in the B2C digitalized subscription economy was and continues to be entertainment streaming. Subscriptions for audiobooks, music streaming, and over the top media streaming services such as Netflix (www.netflix.com) have revolutionized the entertainment industry by facilitating greater access to higher quality content at lower prices. Online media catalogues available via digital subscription have largely superseded older methods of entertainment distribution such as cable television and DVD and CD sales.
Other subscription services involve the delivery of goods on a set schedule, paid through automated regular installments via apps. As food media and healthy, Instagrammable food became trendy but people continued to have full time jobs and time consuming children, food delivery services such as HelloFresh and Blue Apron aimed to facilitate home cooking with maximum convenience. Before lockdown orders and the necessity for contactless everything, the digitalized subscription economy was already providing consumers with convenient and efficient solutions for modern living.
The ongoing pandemic has tragically devastated many industries and severely disrupted the status quo of globalized trade. However, the digitalized subscription economy stepped up to replace many of the services and facilities we took for granted before lockdowns took away our schools, restaurants, offices, and shopping malls. According to this McKinsey report consumers were 20% more likely to purchase media online during 2020 compared to 2019. Video streaming, digital news, e-learning and video conference subscription rates all grew significantly in 2020, as Netflix and Zoom stoically took the place of cinema dates and office meetings.
There were many opportunities during this pandemic for the subscription economy to innovate and strengthen the mutually beneficial relationship between customers and providers. But as we look to the future, we can see many ways in which the pandemic-induced renaissance of the digitalized subscription economy will continue to grow as we begin to emerge from this strange, chaotic period.
In the immediate aftermath of the pandemic, it is likely that the digitalized subscription economy will have to navigate both lingering pandemic anxiety and consumers’ increased reliance upon and comfort with e-commerce. For many consumers, digitalized subscriptions may have permanently superseded the old fashioned brick and mortar means of grocery shopping, cinema going, and restaurant dining. Even as we start to see the light at the end of the tunnel, consumers will likely continue to rely on contactless, digitalized services that facilitate spending minimal time in crowded indoor public spaces, either due to convenience or health concerns.
A significant lifestyle change for many during the pandemic was the office going virtual, which was supported by many digitalized subscription services such as Zoom and Slack (slack.com). An interesting consequence of lockdown life is that many economies that may have been reluctant to digitalize day-to-day office life and allow flexible work arrangements have had to finally make that leap. According to McKinsey, companies digitized activities 20 to 25 times faster than they had previously thought possible, and moved to remote working 43 times more quickly than expected. Now that daily commutes and water cooler chats around actual water coolers are an optional part of corporate culture, SaaS B2B and B2C companies within the subscription economy will likely focus on improving the dubious privacy protections and annoying tech issues of teleworking.
With more of the workforce at home the food and hospitality sector - which has already borne the brunt of repeated lockdowns and bans on dining out - can no longer rely on office coffee runs or hungry pencil pushers looking for a quick lunchtime takeaway. Many fast-casual outlets have launched innovative subscription services as part of their strategy to bounce back from lockdown and reduced inner-city traffic, such as Pret a Manger and Panera Bread’s coffee subscriptions. In the post-pandemic world many sectors may no longer be able to rely on foot traffic in once-bustling business and tourist districts, but subscription services are a reliable way to maintain a loyal customer base.
Another sector that can no longer rely on mass gatherings in public spaces is the travel industry, as people can no longer travel whenever they like. Several hotel chains are launching monthly subscriptions to allow individuals or corporate entities to use hotel facilities, rather than the more traditional model of paying per room, per night. With travel severely curtailed, a subscription service has the potential to rebrand hotels as an attractive office space for mobile workers, who may have a less-than-ideal ‘work from home’ set-up and would appreciate a quiet, private room away from screaming children and piles of laundry.
Some chains, such as InterContinental, are considering repurposing some rooms into private gyms and recording studios to further expand the services available at now-empty hotels. Other hotel subscriptions are aimed at flexible workers and travellers seeking an alternative to renting in big cities.
Dutch chain citizenM is launching two separate subscription services - a ‘corporate subscription’, which allows companies unlimited access to hotel ‘living rooms’, as well as overnight stays and use of meeting rooms, whilst a ‘global passport subscription’ provides unlimited hotel accommodation for a monthly subscription. citizenM’s chief commercial officer Lennert de Jong says that the current situation has provided ‘this once-in-a-lifetime opportunity to become the Netflix of the hotel industry’. Whilst it is yet to be seen if this business model is sustainable in the pandemic and post-pandemic epoch, the subscription economy is facilitating change and innovation in industries that have been hardest hit by the current situation.
Although the pandemic may have permanently changed our working lives and our attitude towards handwashing, there are other issues facing the post-pandemic consumer that are not related to the myriad ways in which pathogens and globalism don’t get along. Consumers are increasingly concerned about sustainability; according to Business Insider, 47% of internet users have ditched products and services that violated their personal values, such as environmentalism and sustainable consumer choices.
The sharing economy has the potential to break away from the conventional product lifecycle of mass production, limited usability, and planned obsolescence. Some subscriptions offer a more eco-conscious option by virtue of limiting how much stuff an individual is expected to own; through digitalized subscriptions consumers can share online media catalogues, cars, bikes, and even clothes, through services like Rent the Runway.
Other subscription services are capitalizing on the strong relationship between providers and customers by using subscriptions to fund sustainability innovation. On, a premier sportswear brand, has used the subscription business model to launch Cyclon, a ‘shoescription’. The Cyclon shoescription allows customers to regularly receive a new pair of running shoes in exchange for their old pair, which are then recycled into new shoes.
The pandemic may have briefly distracted businesses and consumers alike, but when this storm blows over we will still have to reckon with the reality of climate change and the massive ecological impact of unsustainable mass consumption. The digitalized subscription economy has fostered real innovation in sustainability, and we can expect to see more exciting new environmentally-friendly subscriptions in the future.
As this annus horribilis finally comes to a close, we can see how the digitalized subscription economy has fostered innovative solutions as some conventional business models proved disastrously unsustainable in the face of a global crisis. As we look to the future, we can expect to see the digitalized subscription economy continue to thrive and provide new solutions and products for the post-pandemic world.
This pandemic is the second major economic disaster after the 2008 global financial crisis to impact consumers, particularly the younger generation. This will only fuel the millennial’s acrimonious divorce from the idealized notion of ‘ownership’ as a key part of adult identity. Instead, millennials will continue to care about the value for money and convenience of the sharing economy as ownership of big-ticket items become both unattainable and undesirable. Modern-day consumers are also increasingly concerned with the environmental impact of their consumer choices, and we are already starting to see companies utilize the subscription business model to provide sustainable consumer options for previously disposable items. The subscription economy will also revolutionize sectors that have realized they can no longer rely on foot traffic and brick and mortar - what we can rely on is the human capacity to innovate and to reimagine a brave new world in 2021 and beyond.