Subscription models are a growing trend among US-based businesses, with data revealing that they are growing 3.7x faster than S&P 500 businesses.
Retail solutions experts Lexmark compiled the data on subscription-based businesses, with design agency Nowsourcing helping create an excellent subscription model infographic detailing the latest facts and figures. It makes for interesting reading, especially for small businesses thinking about introducing a subscription option for their products or services.
Here are some of the highlights of Lexmark’s research.
Subscription Model Types
With 225 million subscriptions and 61 million subscribers in the US alone, it is clearly a business model that can reap great rewards. Lexmark discovered that at 55%, the biggest share of this subscription market is dominated by curated subscriptions, such as those for media and physical products.
The next biggest share is for replenishment subscriptions for items such as groceries, toiletries and office supplies, which takes 32% of the market.
Small Business Deals
Membership and access subscriptions make up 13% of the overall subscriptions market, with Amazon dominating this field with 66% of consumers.
Convenient and Cost-Effective
The growth of subscriptions is mostly attributed to the convenience of the model along with its simplicity. It is an engaging medium for consumers, as well as for small businesses and operators.
Lexmark researched the reasons why consumers are choosing their subscriptions, and found that 40% cited convenience as their reason. A slightly less amount also cited the cost-effectiveness of subscriptions as their main reason for using them.
Small businesses that generally appeal to younger generations will be pleased to hear that this business model is more popular with younger people than older folks. Only 9.4% of Baby Boomers are likely to subscribe to a physical or digital subscription service, while a significantly higher 39.3% of Millenials are likely to.
To a lesser extent, Generation X is also into subscriptions, with 27.2% likely to subscribe. Meanwhile, Generation Z sit at 21.9% likely to subscribe, though this number is projected to grow significantly as the group matures.
The market is clearly there for small businesses to expand their offerings with a subscription model, and that market looks set to keep on growing.