In the age of online shopping, the way we consume products is completely different. Access is the best it’s ever been, with everything and anything you could want quite literally at your fingertips. Need lunch? Flowers? A UPS? A fridge? A gift? No need to leave your home, you can just click a few buttons and get whatever you need right to your doorstep.
The next frontier? Subscriptions. Over the last decade, the subscription model has become a prominent feature across industries, seen in everything from streaming services and weekly meal kits, to Software-as-a-Service (SaaS), and beyond. This growth was supercharged by the COVID-19 pandemic, and its impact on consumers' ability to access basic needs.
This wave is transforming and revolutionising consumer behaviour. So much so that the subscription economy is projected to be worth almost $1 trillion by 2028.
This shift is transforming the way companies do business and how individuals access products and services. Product subscriptions are quickly growing in popularity, becoming a beacon for many who lack basic access to the items they need.
Why Subscribe?
The subscription model offers consumers a multitude of benefits. Subscriptions give customers the flexibility to experiment, without the commitment of ownership. Consumers gain greater access to products they need and want, in a more affordable way that actually fits in their lifestyle. They have the luxury of convenience with automated, recurring payments.
No longer do they need to make trade-offs between the things they need and want. Subscriptions allow customers to take control over their budget and enjoy life a lot more. 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.
Another important benefit from joining the subscription economy is supporting sustainability. In an era of heightened environmental awareness, subscription services that prioritise sustainability have gained significant traction.
To highlight our own example, Rentoza’s business model is built on the concept of the circular economy, which seeks to extend the lifespan of products to reduce the need for new manufacturing. This means that when you’re done with a product subscription, you can send the old product back, and upgrade to a new subscription, and we’ll make sure your old tech finds a loving new home.
The Global Perspective
Internationally, many digital subscription businesses are thriving – according to Zuora, a digital monetization firm, subscriptions companies experienced average growth of 10.4% in 2023, compared to the S&P 500’s 6%. Key examples of global-scale subscription businesses include streaming services such as Netflix and Disney, as well as SaaS businesses like Adobe or HubSpot.
However, developing nations offer a slightly different story from the global narrative. Here, growth may be hindered by factors like lack of access to wifi or data, and lower computer literacy. Another important factor is the presence of mature payment infrastructure in the developed world, thanks to payment gateways like PayPal, Visa, or MasterCard, which facilitate frictionless subscription payments.
But the situation is changing rapidly – 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.
Rentoza is a prime example of the opportunities on offer in South Africa. Our explosive rise reflects the potential of its market: As of the end of March 2024, Rentoza earned 161% growth in sales year-on-year, a nearly 1000% growth in website traffic, and nearly 250% increase in monthly revenue.
Partly, this is due to an underserved market. According to our own research, the total addressable market for appliances and electronics (just two of the eight product categories we offer) exceeds $25 billion. At the same time, more than half of all electronics and appliance purchases in the country are made using credit. Our unique offering – combined with a proprietary non-credit verification process – makes Rentoza and companies like us uniquely placed in a market searching for access to products.
Subscribe to the Future
In the face of ongoing financial headwinds, consumers are looking for, and willing to reward, solutions that provide access to both essentials and aspirational products and services.
Increasingly, traditional modes of purchasing and ownership are unable to fill these desires. Subscriptions offer a doorway to a world where these things become possible once more. Companies like Rentoza don’t just provide basic access to those unable to secure credit. They allow consumers to embrace newly flexible finance, while still accessing the goods and services that are a necessary component of uplifting themselves. And all the while providing a path to a circular economy that’s key to transforming our relationship with our natural environment.
Because subscription isn’t just a profitable way to build a business.
It’s the future.
