My Latest Blog PostIt's A Subscription World Subscriptions

It’s A Subscription World

The concept of a subscription service isn’t new. Historically people were first introduced to the idea when we all decided we needed to lose a few kilos. With the promise of washboard stomachs and bulging biceps, we signed up with fortnightly direct debits lasting well beyond the time we actually visited the gym. The gyms even made it intentionally hard to cancel too, thinking they might guilt us into coming back eventually.

Since then, there have been magazines, food boxes, TV and music. Anything that someone thinks you’re going to need on a regular basis, has been turned into a subscription. And the success of these has been varied.

What is a subscription?

We probably all have live subscriptions debiting our credit cards as we speak. Popular ones such as Netflix, Spotify, iTunes and so on are commonplace in the consumer landscape. They’re also relatively cheap. Half of their success is that most people don’t even notice the spend on their credit card. For example, spending a small amount every month on the delivery of razor blades is likely not registering.

Those that have failed, or struggle to find their place, are those that might be more expensive or are at least an additional charge that you weren’t expecting. Food boxes are one of those. The attraction can wear off quickly if the box contains meal options you don’t immediately like and if there isn’t the obvious perception that money is being saved. The downside of most subscription services is that they are relatively easy to cancel (unlike that old gym membership used to be).

In comes the newest trend in subscription services – subscription cars. Services like Motopool take the headache out of owning a car with their pool of different style vehicles, unlimited switching (at certain levels) and all costs (except for petrol and tolls) included in the one monthly fee. Need a ute for the weekend to move some furniture? Just switch over from your usual compact SUV for no additional cost.

Why use subscriptions?

The benefits seem obvious. Switch on and off when you like, save yourself the pain of trying to sell a secondhand car at the end of the term and move around makes and models depending on what you have planned and what car you need. Even the cost with service such as Motopool seems comparable to actually buying a new car. Sure, you won’t own the asset at the end of the term, but much like buying a car traditionally, that asset is often worth the same as the remaining loan owed.

Is it too good to be true?

So what are the drawbacks? Well, for one, if you need to keep fitting and unfitting child seats, that would become a chore. Secondly, the cost isn’t massively cheaper than owning a car. This is something that most subscription plans in other industries are quick to trumpet. Neither of these are big hurdles for the consumer to cross. In fact, many people would be happy to pay the money for the benefit of the flexibility on offer.

Perhaps the biggest issue will be the ingrained sense of ownership Australian’s have when it comes to cars. Owning a vehicle is a right of passage for many. Giving that up is something many might equate to losing a level of freedom. The reality is that cars can be lost quite easily through accidents or redundancy or change in family circumstances. Making the general public understand this is difficult.

Early adopters will be the key in this market. If you’re willing to invest in a new idea, you will be rewarded with the benefits of the flexibility of a subscription. And really, the success of car subscription doesn’t need to replace the whole existing market – it just needs to make a small dent in order to be beneficial to everyone.

Car subscriptions are inevitable. There are clear benefits for you, with perhaps only car finance companies the long-term losers here. The level of uptake will be dependant on how well and how quickly the new players in the marketplace can convince the Australian driver that there’s a better way to own a car.

Guest Blog by Simon DellSimon Dell is the founder of digital marketing consultancy Paper Planes and writes in various publications on marketing, tech and innovation.

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