Netflix. uCook. MasterClass. Subscriptions have taken over, bringing with it a new way to access and consume content and products. Today, you can subscribe to virtually anything. A weekly meal kit service? Check. Monthly dog toy deliveries? Subscribed.
Subscriptions have taken over virtually every industry, including food and personal care to streaming services and Software-as-a-Service. This positive growth was definitely supercharged by the COVID-19 pandemic, and its impact on consumers' ability to access basic needs.
It’s thus no surprise that the subscription economy is projected to be worth almost $1 trillion by 2028. Subscriptions are already popular in most developed countries. However, emerging markets, like parts of Africa, Latin America, and Southeast Asia, will truly benefit from this business model.
The Potential
Let’s take South Africa as an example. South Africa has a debt problem. 2023 was an incredibly difficult year financially due to high inflation on essentials like food, electricity, and petrol, high interest rates, and load shedding which impacted economic growth for small businesses. As a result, households were spending 62% of their net incomes on paying off debt.
Given this scary state, it’s understandable that most South Africans are focusing their spend on essentials over luxuries. But household and tech essentials, like phones, laptops, fridges, and washing machines, are still expensive. How are people meant to afford all the things they need, while still enjoying the things they want?
This is where subscriptions swoop in to save the day. With subscriptions, consumers don’t need to make trade-offs between the things they need and want. Our subscriptions allow customers to get the items they need and simply pay affordable, month-to-month payments that work with their budget.
Consumers gain greater access to products they need and want, in a more affordable way that actually fits in their lifestyle. In turn, subscriptions can help customers on their journey to financial freedom by creating a new way to access products while still managing their monthly budget.
Businesses also benefit from subscriptions as they experience steady, recurring payments. They also enjoy greater customer retention, as they maintain customers for as long as their subscriptions last. And once a customer is in the door and buys into the idea, they’re more likely to stay.
Rise to the Challenge
Of course, it’s not all sunshine and roses. Subscription services in emerging markets face unique challenges. Infrastructure issues, such as unreliable delivery systems and limited internet access, can pose hurdles. Plus, there’s the need to navigate diverse consumer preferences and cultural nuances. But let’s face it – where there are challenges, there are also opportunities.
Post-pandemic Africa has seen a proliferation of payment providers across the continent, and a 2022 McKinsey report speculated that the continent's e-payments market will grow by 150% between 2020 and 2025. This is a clear signal of the developing world’s increasing embrace of new modes of consumption, and subscription stands to benefit enormously from this shift.
Innovative companies are rising to the occasion, creating solutions that are as localised as they are sophisticated. Whether it’s using mobile payment systems to overcome banking issues or partnering with local delivery networks to ensure timely service, these companies are showing that where there’s a will, there’s a way.
As the world continues to shrink and digital innovation accelerates, the subscription service model is poised to thrive in emerging markets. Subscription services are redefining how people access and enjoy products.
