The Amazing Growth of the Subscription Business Model
The subscription-based business model has taken the United States by storm in recent years. There are 225 million subscriptions available and 61 million subscribers nationwide, meaning that each person has an average of 3.7 subscriptions. These numbers are only projected to grow as this business model encompasses more types of products and services. Already we are beginning to see subscriptions for everything from haircuts to TV streaming services to dog walking. Subscription models are growing at an astonishing rate—they are outpacing the S&P 500 companies’ growth rate by 3.7x.
The two main categories of these subscriptions are direct-to-consumer (DTC) and business-to-business (B2B). Eliminating intermediaries has made DTC subscriptions more and more popular, as consumers appreciate the affordability and convenience that subscriptions are offering. For example, Amazon Prime has eliminated the need for a brick and mortar shopping location for a lot of people, because subscribers can order whatever they want directly to their doorstep. This was a factor that made subscriptions very popular during COVID-19 lockdowns, as people did not have to brave getting sick to receive their basic necessities. In fact, the subscription market grew by 11.6% during the pandemic alone, while other businesses shrank by 1.6%.