Year of the rise of a new economic model?

In recent years, more and more people are using e-commerce, but they are also using the subscription model. Companies are constantly developing offers and services. Digital payments are clearly helping to move the world forward.

The latter needs to adapt not only to the scope of products and services, but also to the payment methods and data protection policies offered. Habits have evolved and consumers now want to pay only for what they consume. So is the “subscription” model still relevant?

Why do I own it when I can subscribe?

Today’s consumers are knowledgeable, responsible and enthusiastic. They are not actually owning the product, but looking for applications that meet their specific needs. The days when the relationship with the company was a one-time transaction are over.

Widely adopted by renowned players such as Deezer, Netflix, and Spotify, the concept of subscription offers unprecedented freedom, the freedom to use the service anytime, anywhere.

Indeed, a real subscription economy has emerged. Of all the business models we know, subscription-based business models have seen the strongest growth in the last few years. However, this model is not suitable for everyone and not all companies are ready to adopt it.

Today’s consumers want to buy goods and services at their convenience in a flexible and fluid way. Therefore, subscriptions in the same category are not enough to please and re-please everyone in a unified way. When it comes to shopping behavior, we’re entering a new era that requires a different user-centered business model.

Netflix-like subscriptions: a business model that suits everyone?

The business model based on online subscriptions is clearly very solid. In France alone, there will be about 50 million active subscriptions in 2021, which is almost 9% of the European market. The French market has already exceeded 5 billion euros and is expected to double by 2025.

Exclusive access, immediate availability of products or services … The subscription business model is designed to provide consumers with a lasting customer experience, benefiting both customers and merchants. Merchants, on the other hand, benefit from a stable payment flow and can therefore predict their annual income.

Sectors that were previously separated from the subscription business model are being converted one by one. The French-based Maison de la Literie, which offers subscriptions to the British restaurant chain PrêtÀ Manger and its drinks, or beds and mattresses, is a very specific example.

Subscription payments provide the ability to “order once and use multiple times”. However, the main problem with this model is that subscribing to a service is as easy as unsubscribing. Increasingly, the number of offers and services available will result in a significant loss of merchant customers. In addition, a subscription-based business model brings the same needs, habits and behaviors to all consumers. But we all consume different ways: frequency of purchase, quantity, variable quantity, different and diverse ways …

Repeat Economy: An economic model for new tech-savvy consumers?

Customer loyalty is at the root of the war for any trader. Unfortunately, customer acquisition has become more and more expensive in recent years and is no longer sufficient to ensure player growth. Over the last six years, this cost has increased by about 60%. Marketing is much more expensive and customers are much less loyal to the brand than they used to be.

As the services offered become more and more personalized and can be customized to meet the needs and desires of consumers, subscription-based models are limited.

To be sure, consumers have never been so demanding. They want access to services and products that fully meet their needs when they want.

Consumers expect brands to offer products and services repeatedly, but with no contracts, restrictions or conditions. This is where the concept of repeat economy or repurchase comes into play. This strategy allows merchants to focus their efforts and costs on the customer experience. A new economic model, the repeat economy, allows merchants to maintain strong relationships with their customers, whether they order once or several times on the platform. In the repeat economy, there are no restrictions on the amount of purchase, the amount of purchase, or the seasonality.

Uber and Amazon adopted this idea early on. You don’t have to register or buy when you need it. In fact, most importantly for your customers, thanks to a very smooth payment process, you can meet your needs with just one click without having to enter your personal and payment information every time.

To facilitate these recurring purchases, the customer journey must be multi-channel, secure and friction-free. The payment process should be as simple as possible, providing the products you need, when you need them.

To be sure, payment is a decisive factor in the shopping experience. If the experience isn’t smooth, customers are more likely to abandon their cart. In 2020 alone, payment failures cost the global economy $ 118.5 billion.

Therefore, merchants need a secure, stable and scalable payment platform. This can reduce the number of failed transactions and increase customer loyalty. Digital transformation is needed to stay as close as possible to consumer buying habits. The repeat economy promises more than great progress, a better customer experience, and customer satisfaction.