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The growing subscription economy: The impact on UK businesses

The growing subscription economy: The impact on UK businesses 3

By Nikhita Hyett, MD, Europe, BlueSnap

The growing subscription economy: The impact on UK businesses 4

The subscription economy in the United Kingdom has grown in recent months, owing primarily to the coronavirus epidemic. Businesses and customers sought more flexible and convenient methods to sell and acquire products and services when businesses closed their doors due to the numerous lockdowns. Subscriptions will continue to increase in popularity in the coming years.

The new subscription age

Subscriptions are becoming the new normal when it comes to purchasing products and services, whether it’s meal boxes from Hello Fresh or digital streaming choices from Spotify and Netflix.

Physical stores were closed for the most of last year, forcing industries that weren’t already in the subscription game to change rapidly. Despite being one of the industries that depended heavily on physical showrooms, the car business, for example, rushed into the digital age with tremendous success.

The days of spending hours in a vehicle dealership haggling a price and needing to pick up the automobile in person are long gone. Its position has been taken by simple, all-in-one internet markets and specialised automobile subscriptions, including all-electric choices from firms like Onto.

Customers have enjoyed the freedom afforded by the subscription model of automobile ownership, where they pay monthly for their cars and go online for aftersales and add-ons, in a year full of uncertainties and economic problems.

And it’s not only large corporations that are turning to subscriptions as a new income stream. Small and medium-sized businesses, ranging from local fruit and vegetable markets to art classes and beauty salons, have also made the transition.

Advantages of the subscription model

The advantages of a subscription service extend beyond customers to retailers. The approach offers businesses with numerous data sets and deeper customer insights, allowing them to follow consumer behaviours and product interests more effectively.

This is an expanding industry. Currently, 65% of UK households subscribe to a regular subscription service, with the UK subscription sector valued at £323 million annually per year.

Subscriptions are also considerably easier to handle for customers, especially when payments are done with a credit card. Account Updater, for example, ensures that expired or altered card data are automatically updated. Customers will no longer have to re-enter their information, and sellers will not miss out on payments as a result of the switch to network tokenisation.

Companies may take this a step further by collaborating with the proper technology and payment partners to streamline their backend procedures. Firms, for example, can use all-in-one platform providers to split monthly payment transactions inside between divisions.

The future of payments

With everyone’s lives becoming increasingly hectic, time is a vital commodity. As a result, the two most significant drivers in the purchasing journey are convenience and flexibility. In order to satisfy these expectations, retailers will need to change fast.

The rise in subscription payments over the previous year is just the beginning, as businesses that have been slow to change try to make up for lost time. Fortunately, the payment technology to assist is already available. All-in-one payment providers can help companies in capturing a portion of this new income stream.

Businesses may simply leverage current subscription integrations or develop their own subscription engine from the ground up by using third-party platforms and paytech knowledge – with the speed necessary to meet this increasing market demand.

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