Today, society is constantly on the move, and our living conditions are changing rapidly. In years younger economically active citizens, ownership no longer seems like a privilege, but rather an additional expense and long-term commitment, which in these conditions of uncertainty can create burdens rather than benefits.1 In the last five years, such technology and streaming giants as “Microsoft”, “Netflix”, “Spotify” and “Amazon” have contributed to the rapid development of the subscription business model.
Content will continue after the ad
Advertising
More and more companies from various industries are offering their products and services for subscription.
Such subscription services provide consumers with freedom, flexibility and the opportunity to plan their finances more effectively. A new entrant in the business of subscription services is car subscription. It is possible to subscribe to the service and receive the car with the help of a few clicks. In addition, the consumer can get the car immediately – without paperwork or long-term commitments, which allows significant time savings. It is easy to subscribe to a car by choosing the model of the car and making an advance payment, which will be included in the subscription fee. This means that in the future the prepayment will be divided into equal parts according to the subscription period, reducing the monthly payments by the corresponding amount. By subscribing to a car, the consumer can receive it at any time of the day.
Loss of ownership – subscription to services as a way of life
The results of a 2019 study by the University of Siegen (Germany) show that the subscription model increases consumer comfort by offering some flexibility as opposed to ownership. Also, young people are no longer purposefully saving up to buy real estate or a car. Free financial resources are invested to travel the world, while a residence is rented and shared mobility services are used on a daily basis. For “Millennials” and “Gen Z” generations, subscribing to daily services is like a way of life, as it is possible to receive and just as easily cancel services with a few clicks. Statistics compiled in 2020 on entertainment and media subscription habits of United States consumers reveal that, on average, one resident subscribes to 12 different entertainment and media paid services. Looking at the number of subscriptions by age group, “Millennials” (born between 1982 and 2000) lead with 17 active subscriptions, followed by Gen Z (born between 2001 and 2012) with 14 subscriptions and Gen X (from 1961 to 1981 .) with 13 subscriptions.
The growth of e-commerce was facilitated by Covid-19
E-commerce and subscription services experienced significant growth during the Covid-19 pandemic, when companies rapidly changed sales channels in order not to lose their customers. This trend is observed not only in technology companies, but also in the transport, industrial and medical sectors. For example, regular home delivery of food, shaving kit and new socks tailored to the dog’s breed, or the offer of garden care tool manufacturers to rent garden tools to customers without the need to own them. These and many other examples clearly demonstrate the diverse possibilities and wide range of subscription services, which are constantly being developed in line with consumer preferences.
You can subscribe not only to music, but also to cars
Experts predict that the auto trade industry will also experience significant changes. Already in 2025, approximately 8% of all vehicles registered in the world will be intended for subscription purposes. Citizens are increasingly giving up their personal vehicle, as the car is one of the most expensive household goods. That is why car sharing services – for short-term use – and car subscription – for daily use are becoming popular in Europe and also in the Baltic States. Users don’t have to worry about rising costs due to fluctuating interest rates, nor do they have to worry about unexpected expenses.
A vehicle subscription works much like a music streaming service. The customer pays a fixed monthly fee in return for receiving the chosen vehicle, which can be used for his needs at any time. We are already seeing customers appreciate the flexibility of the service as it meets our changing needs at different stages of life, for example, easily changing from a previous car to one with a more spacious interior as a family grows, or choosing a vehicle designed for long journeys when moving. outside the city.
Advantages – service and maintenance expenses are reduced
Consumers indicate that the most important benefit of subscribing to services is financial savings, as companies provide free delivery or return of goods, special offers for extending the subscription at the end of the term, and, for example, in the case of renting garden equipment, there is no need to worry about unplanned expenses related to maintenance and repairs. The second most important aspect for users is convenience, because you don’t have to remember to order and pay for the product every time. Consumers especially appreciate the opportunity provided by the subscription to use the highest quality products that they could not immediately afford. For example, subscribing to a car with full equipment and maintenance service, instead of buying a car with minimal equipment and covering all expenses related to the car. This type of approach provides users with freedom, flexibility and the ability to effectively plan their finances. We also see the growing market potential of this industry in Latvia, so in the future we will increasingly see that consumers will choose car subscription services instead of buying a car, which allows you to use the subscribed car from six months to three years.
