Subscription services on the rise, study finds

The number of Australians who pay for subscription services is on the rise, a new global survey has found. More than two-thirds of Australians have subscription services today, up from 49 per cent just five years ago, according to the survey, which was conducted by Harris Poll on behalf of Zuora, a subscription management platform provider.

Australian respondents to the survey averaged 2.5 subscription services, below the leader China, where respondents averaged 3.6, and the US and Singapore, where respondents averaged three. Nearly one-third of Australians believe they will have more subscriptions in two years than they do now.

The survey involved more than 13,000 respondents from 12 countries, including 1040 Australians.

The findings support the idea that we’re witnessing the “end of ownership”, according to Iman Ghodosi, Zuora vice-president and general manager of the Asia-Pacific region.

“What we’re starting to witness is the end of ownership. People are subscribing to more because they’re getting the experience and outcome they’re looking for, without the burden of possessing things,” Ghodosi said.

About 75 per cent of Australian respondents to the survey believe people will subscribe to more services and own less physical “stuff” in future, and about two-thirds said that a person’s status is no longer defined by what they own.

“Commercial goods such as food, clothing and transportation are being reimagined as utilities to leverage where and when needed, much like water, gas or electricity is consumed today,” Ghodosi said.

Netflix for your wardrobe

The rise of the subscription economy has serious implications for retailers, but some businesses, such as Sydney-based clothing rental company GlamCorner, are embracing it, rather than fighting it.

After making a name for itself as the go-to destination for renting garments for special occasions like weddings, birthdays and engagement parties, GlamCorner recently launched a monthly subscription service for workwear and everyday-wear.

“We introduced this service in direct response to requests by our very own customers,” GlamCorner co-founder and chief operating officer Audrey Khaing-Jones, told IRW.  

“We’ve had so many customers give us feedback after being regular rental customer of ours [that] their wardrobes have been shrinking and decluttering their lives!”

The company is currently testing the subscription service in an open public beta phase, but says it has already signed up thousands of customers, and one-third of them are completely new to GlamCorner.

The company is now focused on solving the logistical challenges of operating both a monthly subscription service and a one-off garment rental business. One major bottleneck is caring for and cleaning all the clothes in a timely manner, so they can be re-rented.

“We clean roughly 30 tonnes of clothing per month and our subscription program could potentially double this within the year as it moves into full release,” Khaing-Jones said.

“It’s for this reason we recently expanded to a new warehouse facility that’s double the size of our previous [fulfilment centre].”

GlamCorner is confident that the demand for clothing rental is there, and it only needs to make the experience as smooth as possible for it to become a viable option for everyday life.

“Our goal is for this offering to be like Netflix for your wardrobe,” Khaing-Jones said.

Arguments for both sides

However, for Youfoodz, a fresh food company that recently expanded into meal kits, the lack of flexibility of subscription models was a key reason it chose not to offer its meal kits on a subscription basis, despite the fact that this is the norm in the sector.

“Our focus has always been on offering Youfoodz customers freedom – to put more hours back in their week and [enable them to] shop what they want, when they want, as much as they want – and that consideration didn’t change when we launched Meal Kitz,” Adam Coward, chief marketing officer at Youfoodz, said.

Coward noted that the company’s menu is constantly evolving with seasonal changes and new product lines, and discounts and special offers, which subscription customers would miss out on.

“That said, subscriptions do offer the opportunity to lock in a healthy habit, making it easier to stick to health and weight loss goals. There are definitely arguments for both sides,” he said.

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