Retailers and Consumers Benefit from Subscriptions

SubscribeHas anyone heard about retailers offering a subscription plan for regularly recurring purchases like diapers or office supplies? I read recently that Target is now offering this pricing model for baby supplies; Amazon has offered the same pricing model for baby supplies for ages.  It’s an interesting concept that I’m seeing more and more of and I think it is a good deal for customers and for retailers alike. Here’s why.

For consumers, it offers convenience. Looking at my own personal behavior, I’ve adopted it without thinking about it. Specifically, I subscribe to my movies through Netflix and my music through Pandora. It works out for me since I know I am going to consume these offerings without fail and I love not having to think about payment transactions each month. They just happen.

For retailers, the beauty of a subscription model is that it helps to transform a product approach (unit sales, price per unit, etc.) into a relationship, which to me suggests customer loyalty. This shift changes the time horizon, too. Whereas, in a product economy, a sale might be a one-time event, in a subscription economy, we begin to think in terms of multiple orders over a lifetime.

But in addition to retailing, we have seen an earlier precedent. I think we saw subscriptions really take off first in digital services and products. In fact, back in 2011, Gartner Analyst Chris Fletcher predicted that by 2015, “… more than 40% of companies selling media and digital products, such as software, services and content, will rely entirely on SaaS or hosted subscription management services to manage their fulfillment, entitlement, billing, renewal and customer loyalty requirements.” [Source: “Building a Strategy for the Subscription Economy,” Gartner Inc., April 11, 2011].

And now we’re definitely seeing consumer goods follow the same trend – check out this article on Mashable: 18 Reasons You’ll Never Leave Your House Again.  In fact, I think it’s a good time for Lionbridge to offer a subscription-based approach for programs with recurring monthly requirements, such as what we do for our Agile Translation customers.  More on this next post!

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