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Commentary: From laptops to home appliances, subscriptions are rewriting the rules of ownership
The continued growth of subscriptions demonstrates a broader change in the consumer mindset, says Stripe’s Sarita Singh.SINGAPORE: Need some new clothes for a wedding? There’s a subscription for it. Need a car for a couple of months? There’s a subscription for that. How about tailored meal kits for yourself - and your dog? You guessed it, there’s a subscription for those too.
From Netflix and Spotify to mobile phones and even furniture and home appliances, it seems like almost everything can be accessed on a subscription basis today. So much so that the idea of owning things outright is starting to feel a bit old-fashioned.
In the past, possessions were a big deal for our parents and grandparents. The pride of owning a home and the tangible sense of security from owning valuable items were important. For them, ownership wasn't just about having things; it was a testament to hard work, success and stability.
However, as the subscription economy gains traction, this traditional view of ownership is being challenged. According to FT Strategies, a specialist media consultancy owned by the Financial Times, half of consumers say that subscriptions enable them to access products, services and a lifestyle that they otherwise would not have.
Is the shift towards subscriptions today really the future of consumerism? Can subscribing actually replace buying?
FROM LAPTOPS TO DISHWASHERS
While subscriptions may have transformed the typical shopping experience, the concept is not new. In fact, the first subscription service as we know it launched in 1856 when sewing machine company Singer offered customers the chance to rent a machine for US$3 a month.Fast forward more than 160 years, our subscription options have grown far beyond sewing machines.
In Singapore, for instance, tech subscription services such as Circular and ITEZ.SG allow customers to lease gadgets such as mobile phones, laptops and gaming consoles. A three-month subscription for a brand new 128GB Apple iPhone 15, for example, costs S$79 (US$58) a month.
Customers can also subscribe to new or refurbished items such as dishwashers, refrigerators and vacuum cleaners with Levande by Electrolux. A dishwasher, for example, costs from S$72.99 a month.
In Japan, accommodation service TsugiTsugi offers plans that enable guests to stay at any of its 140 resorts, inns or hotels nationwide during the subscription period, at multiple cost tier levels.
This is fuelling the trend of “everything-as-a-service” where consumers and businesses can subscribe to services in all aspects of their lives, without huge upfront payments. But how far will this shift take us, and what could hold it back?
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GEN ZERO OWNERSHIP
According to UBS, the subscription economy is expected to swell to US$1.5 trillion by 2025, making it one of the fastest-growing industries globally. The continued growth of subscriptions demonstrates a broader change in the consumer mindset. That is, we increasingly value access and experience, over ownership.The newest generation of consumers are a big contributor to this trend. Gen Zs, generally defined as those born between 1997 and 2012, are quick to sign up for subscription models as long as they allow for personalisation and flexibility, according to research from Recurly.
At the other end of the spectrum, Baby Boomers - those born from 1946 to 1964 - are particularly reluctant to commit to a subscription, according to a Deloitte report. The report also showed that financial incentives are the most important factor inducing customers to subscribe, followed by convenience and access to premium offerings.
In a rapidly changing world where lifestyles and preferences evolve, consumers appreciate the ability to switch between different products or services without long-term commitment. By lowering barriers to entry, particularly for expensive items like electronics or luxury goods, subscriptions also help democratise access to goods and services across socioeconomic groups.
As this subscription revolution continues to unfold, it's not just about convenience or cost savings. Another significant advantage is sustainability. Singapore generates about 60,000 tonnes of electronic waste annually, the equivalent to each person throwing away 70 mobile phones a year.
Subscriptions allow consumers to reduce waste by accessing products only when needed, rather than purchasing items that may go unused or underutilised. This shift aligns with growing environmental consciousness and the desire to minimise our ecological footprint.
PITFALLS AND CHALLENGES
But there are potential pitfalls and challenges. Customers can easily lose track of how many subscriptions they’ve signed up for, leading to unexpected charges and a ballooning monthly expenditure. Subscribers also need to feel they’re getting their money’s worth on a regular basis, or they’ll stop paying.With living costs on the rise, price sensitivity is also a growing concern. Businesses must strike the right balance: Charge too much, and you scare off potential customers; charge too little, and you risk devaluing your service or leaving revenue on the table.
Companies that offer subscription packages typically do so on flat rates (monthly, quarterly, or annual fees) or usage-based (the more you use, the more you pay).
Given current inflation trends, price cuts are not an option for most subscription services, as they too are grappling with rising costs. So how do businesses attract new subscribers? One strategy is to implement free trials. According to a study by Stripe in eight countries, 74 per cent of business-to-consumer (B2C) leaders believe that free trials are an effective way to gain new subscribers.
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THE FUTURE OF CONSUMERISM
So, what does the future hold for the subscription economy?As companies compete for subscription dollars, it’s likely consumers will see more innovation and better deals. We can also expect more personalisation, with AI-driven recommendations tailoring subscriptions to our individual tastes.
Ultimately, the growth of the subscription economy reflects a fundamental change in how we view consumption and ownership, emphasising a desire for variety, flexibility, and a continuous flow of new experiences.
In this new era, ownership might not hold the same weight it once did, but the essence of what it provided - security, stability, and a sense of achievement - remains as important as ever. It’s just that now, these goals are being achieved in different way.
