In 2020 at the height of the pandemic, our worlds were turned upside down, forcing billions around the world to resort to new ways of life. When we were forced into our homes and away from socializing, having items delivered and personalized to one’s liking became a valuable service. Now, years into a post-pandemic world, subscription services are still a driving force in today’s economy. Subscription models are just one of the many advancements made to the world of ecommerce in the past decade. These services have undoubtedly taken the United States by storm, as some are even growing faster than companies in the S&P 500.
The state of the current U.S. subscription model is promising. The country is home to over 220 million subscriptions and 61 million subscribers. This equates to nearly 4 subscriptions per person, ranging from food, to entertainment, to beauty, to tech. These packages are divided into two main types of service: Direct to consumer and business to business. As the most popular type of subscription option, there are currently over 27,000 DTC subscription services selling straight to customers rather than a middleman. Some of these services are membership services, where users can gain access to perks and other freebies from different companies. Others are replenishment services, helping users with necessities like groceries, office supplies, and toiletries. Amazon and Dollar Shave Club are prime examples of companies that operate under this business model.
The most popular type of subscription service, making up 55% of all available services are those that are curated. This refers to types of media, boxes, and physical products. Birchbox, Fabfitfun, and Barkbox are some of the most well-known companies that offer this type of subscription. People all across the United States are taking advantage of these services, and each state has its own most popular industry to subscribe to. Whether a consumer is a music lover from New Mexico or a Car junkie from North Carolina, there is a little something for everyone under this business model.
There are many reasons as to why people love subscription services so much and why they are growing in popularity so rapidly. Both consumers and businesses alike are taking advantage of how convenient, simple, and engaging they can be in one’s day to day life. First, they are affordable in terms of how convenient and helpful they can be. In fact, over 35% of people agree that subscriptions are worth it because they are cost-effective and convenient. They can be some of the best options for those who are hoping to maximize their time and their budget.
Usage-based pricing is another concept that is closely related to subscriptions that many users love to take advantage of. For example, replenishment subscriptions can help one to get items when they need them, not just on a monthly or on a set timeline. This means that subscribers can base delivery frequency on usage, enabling one to put goods on autopilot. This saves money in the long run, and allows for less waste on both the consumer and producer end of distribution.
Changing demographics of consumers is also a factor that affects the need for subscriptions in our society. Younger generations are now more likely to subscribe to both digital and physical subscription services than any prior generation. Almost 40% of millennials are subscribers, followed closely by 27% of Gen X and 22% of Gen Z. Conversely, only 9.4% of Baby Boomers are indulging in subscriptions, showing the true gap in technologically savvy and reliant generations that we have here in the United States.
Subscriptions are also often used recreationally, with many users revealing candidly that they are “plain fun”. Some subscriptions are just as fun to receive as they are to use, and many people enjoy gaining a digital or physical product as part of the excitement of their daily lives. No matter the reason, subscriptions of all shapes and sizes are taking the world of ecommerce by storm. Some unique and notable packages include monthly houseplant delivery, or scientific equipment home delivery. For businesses, printer ink is a common subscription service that ensures no office is left without one of the most vital resources.
The United States subscription model joins many other important parts of our daily lives as a positive effect of the pandemic. Although we now are able to leave our homes and shop in person with ease and safety, there is no denying the convenience that these services offer. With the popularity of this model, consumers can have nearly anything delivered to their home or their inbox at the click of a button. With clear and sustainable growth in nearly every corner of the United States, it is clear that the subscription model is here to stay for the foreseeable future.
