Subscription Economy News - Week of 4/8/2019

Subscription Economy News - Week of 4/8/2019

Every week, we bring you the top stories and analyses from the global Subscription Economy. 

B2B ecommerce sales surpasses $1 trillion–with more growth to come
Excerpts from an article by Don Davis in Digital Commerce 360

Sales transactions in the United States processed through B2B ecommerce sites, log-in portals and online marketplaces grew 11% to reach $1.08 trillion, according to data published in the 2019 U.S. B2B Ecommerce Market Report.

B2B ecommerce sites, log-in portals and online marketplaces last year accounted for 14.3% of electronic sales and 7.2% of total B2B sales, but recent research by B2BecNews indicates those shares will rise sharply over the next few years.

The analysis uses data from the U.S. Commerce Department and proprietary data collected by B2BecNews. It includes sales by U.S. manufacturers, wholesalers, distributors and retailers that sell to business customers, such as office supplies retailer merchant Staples Inc. and home improvement giant The Home Depot Inc.

According to B2BecNews surveys in 2018 of 276 manufacturers, wholesalers and distributors, 60.7% of manufacturers and 38.1% of wholesalers and distributors do not yet have an ecommerce site. But the vast majority of those without an ecommerce site, or 75%, said they planned to launch one within two years.

Read the full article in Digital Commerce 360

‘The opportunity is well beyond 1m’: The Financial Times CEO John Ridding on growing subscribers 
Excerpts from an article by Lucinda Southern in Digiday. 

This week, the Financial Times beat its target of 1 million paying readers, a year ahead of schedule. While the FT has had a paid-for offer for 17 years, the realization has dawned that quality journalism often needs revenue streams outside of advertising. In theory, signing up the next 1 million will take more sweat.

“My mentor said to give a date or a target but never both, but we did,” said the FT’s CEO, John Ridding. “Still, reaching 1 million hasn’t been easy; it’s really hard. But we have 10-plus years on how to target readers, how to reach new audiences and understanding from reader behavior what stories engage them.”

Fifty-five percent of our revenues come from journalism and content. That’s very different to 10 years ago where 70% was from advertising. Having said that, we’re resilient in advertising because of our sophisticated engagement subscription model. We’re more expensive for CPMs because of our deep insight into readers and what they want. There’s a symbiosis. People ask if it is ad or paid-for. We have both; they reinforce each other effectively.”

Read the complete interview in Digiday. 

Apple has sold lots of music subscriptions – so it thinks it will sell lots of other stuff, too
Excerpts from an article by Peter Kafka in Recode

Apple Music has eclipsed Spotify in the US, says the WSJ. The newspaper thinks Apple Music has 28 million paid US subscribers while Spotify has 26 million.

If Apple can sell a lot of music subscriptions — after starting years after Spotify entered the market — by using offering free trials to its huge installed base, imagine what it can do when it starts selling other subscriptions.

The growth of Apple Music is one of the strongest validations yet of Apple’s strategy to increase revenue by selling services across its devices — a shift after decades of focusing on hardware sales. Last week, the technology company announced new subscription offerings for magazines, TV shows and videogames.

There are two different audiences for this argument. Apple is aiming part of this messaging at investors, who are trying to figure out how much money Apple can make by selling things like its gaming service, its news service, and whatever its video service is going to be. The other group is the people and companies Apple needs to partner with to make these services work, by supplying content and support for said services.

Whether it works or not seems to depend on the audience.

Read the full article in Recode

Car-subscription service Carly Launches in Australia
Excerpts from an article by Andrew Chesterton in carsguide. 

A new car-subscription service has launched in Australia, promising what it calls a “true alternative to purchasing a vehicle”.

The Carly subscription program (a part of the Collaborate Corporation that also runs peer-to-peer car-sharing network DriveMyCar) has been online since the beginning of the week, and it says it has already begun attracting customers. The service currently has 130 vehicles online ranging from $119 per week (2009 Mazda 3 Neo Sport on the cheapest package) to $616 per week (2012 Audi Q7 TDI on the most expensive package).

Unlike car-on-demand services like Go Get, the Carly business model offers three level of subscription – entry, medium and ultimate – with each offering a different amount of included kilometres, and differing levels of insurance excess in the event of damage, but with cars you keep indefinitely.

But not matter which package you choose, they all have one thing in common – the ability to switch cars at least once every month, choosing between small city cars and larger SUVs, and even performance models and convertibles, as your circumstances demand it.

The idea being that, if your family circumstances change or if you have a holiday or house move coming up, you can switch cars accordingly. All maintenance, registration and insurance costs are included, too. And when you subscribe to a vehicle, or decide to switch cars, a Carly worker will pick-up and deliver the vehicle to you at home or work.

Read the full article in carsguide. 

Tech giants release subscriptions, not products
Excerpts from an article by Neil Hughes in TechHQ

A recent Gartner survey suggests that in only two years, 81 percent believe that they will be competing on the basis of customer experience (CX). There appears to be a trend developing around the final step of the CX lifecycle. Many new startups are already struggling to obtain funding without a recurring revenue business model. At the other end of the scale, tech behemoth Apple is shifting its attention to recurring subscription models too.

Welcome to the booming subscription economy where many companies are increasingly finding the allure of recurring revenue too hard to resist. By charging under $10 a month, it’s widely thought that customers don’t worry about the price. In many ways, the subscription has become the digital equivalent of a gym membership that many people have, but don’t necessarily use regularly.

The much-loved new business model is attractive to businesses for obvious reasons, such as increasing cash flow. Traditionally, a brand has charged a one-off payment in exchange for product or service. By contrast, subscriptions enable businesses to receive regular, recurring sales, throw in superior customer experience, and many will remain loyal to your brand.

Read the full article in TechHQ

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