Netflix, Spotify, Play, Microsoft, or Zalando and the Option to Buy a Clothing Rental Subscription

Netflix, Spotify, Play, Microsoft, or Zalando and the Option to Buy a Clothing Rental Subscription

Poles' Interest Growing at a Double-Digit Rate

The subscription market affects practically every aspect of our lives – both consumer and business. The dynamic development of this trend is primarily linked to the growth of e-commerce. In 2019, the value of global e-commerce offered via subscription was 15 billion dollars, but by 2025 it is expected to reach 473 billion dollars – according to predictions by McKinsey. This means an increase of over 3,000 percent in the compared period.

The research firm Imarc Group[1] goes even further in its predictions, forecasting that by 2032 the e-commerce subscription market will reach a value of 5,014.4 billion dollars, while at the end of 2023 it was 193.6 billion. This means that in the years 2024-2032 the annual growth rate will be at 43.56 percent.

According to Imarc Group, the development of e-commerce services offered via subscription is influenced by, among other things, the adoption of this service in the context of purchasing gifts (e.g., vouchers), broadly understood technological progress, and the growing popularity of streaming digital media offered by platforms such as Amazon Prime, Disney+, or the aforementioned Netflix.

The subscription model affects practically every aspect of life

Media and entertainment, food and beverages, cosmetics, clothing and fashion, technology and electronics, transport, health and fitness services, children's products, home and garden, books and press, and education. The rental model for services or products is very popular in the categories listed, among others.

According to McKinsey data, in the media and entertainment sector, the number of new subscriptions in Europe increased by about 22 percent between 2022 and 2023. At the same time – as reported by Gartner – the SaaS cloud services market grew by about 18 percent in this respect on the Old Continent. Meanwhile, according to IDC predictions, by the end of this year over 70 percent of companies in Europe will offer their products and services on a subscription basis.

McKinsey reported in its reports that in 2019 the value of global e-commerce offered via subscription was 15 billion. It also predicted that by 2025 it would reach 473 billion dollars. This means an increase of over 3,000 percent in the analyzed period.

The above data may indicate that the subscription model is appreciated by end users, but it is particularly popular primarily in the B2B sector.

- From a business perspective, the subscription model can be much more profitable for both companies and customers than purchasing for ownership. Consumers have the opportunity to test products before finalizing the transaction. In the case of rental, they can change a given product or service when a new model of a product, such as a phone, appears, or an update, e.g., of software. Subscription offers convenience, flexibility, and the possibility of personalization – says Marcin Mordak, Sales Network Director at Komputronik S.A.

Poles Increasingly Willing to Use Subscriptions

The subscription model gives consumers the ability to use products and services on the basis of regular payments. This form is often more convenient than one-time purchases. It enables long-term rental of a service or equipment on a subscription basis.

According to data from the Subscription Commerce Conversion Index, since the first quarter of 2021, the average consumer has doubled the number of retail subscriptions from two to five.

From a study commissioned by ING Bank Śląski, it can be learned that about 46 percent of Poles currently use products and services on a subscription basis – most of them use multiple solutions of this type. Most often they are users of 2 to 3 (42 percent of indications), paying about 150 PLN per month for them.

- Poles have fallen in love with service subscriptions. Equipment rental is also becoming increasingly popular in this context, including game consoles, projectors, or even 3D printers. After all, situations arise in our lives where we need a drill, a trimmer, a car roof rack, or a projector, and our neighbor cannot lend them to us because they do not have the given product or have just gone on vacation. Instead of buying equipment for ownership, we can rent it for a small fee and use it once or twice – says Mateusz Kryś, Project Manager for Additional Services Development at Komputronik S.A.

What electronics do Poles most willingly rent?

The experience of research firms and those in the consumer electronics industry shows that consumers prefer renting small equipment.

- The subscription model applies to the rental of equipment such as smartphones, laptops, consoles, watches, as well as projectors or 3D printers – comments Miłosz Nowakowski, sales director at Brandly360, a supplier of solutions dedicated to e-commerce.

- At Komputronik, about 60 percent of rented items are smartphones, 25 percent of users choose laptops, while desktop computers, monitors, tablets, consoles, and smartwatches fall within the remaining 15 percent. It is worth mentioning here that not all available categories were made available to consumers at the same time. For example, the option to rent consoles has been available in our group for about 4 months. Smartphones, on the other hand, for over a year – informs Mateusz Kryś.

When it comes to smartphones, high-end models of primarily iPhones and Samsungs dominate. Laptops of brands such as Apple, ASUS, Lenovo, or HP lead the way. As for desktop computers, Komputronik's own-brand equipment enjoys the greatest popularity. In watches – Apple Watches, and in monitors – iiyama.

Average basket value, subscription price, and the difference between rental and installments

- Consumers most often rent equipment worth more than 5,000 PLN in our stores. The average basket value indicates that customers choosing smartphones mainly opt for the highest-quality products, often flagship models of a given brand. A laptop priced at around 5,000 PLN in most cases also meets users' expectations – explains Marcin Mordak.

The amount of the rental fee depends mainly on the depreciation of the equipment over the course of a year. The longer its lifespan, the lower the amount the consumer will pay monthly for the opportunity to use it. A subscription differs from installments in that the customer ultimately does not become the owner of the specific item.

Additional services and subscription as… a promotion

- In the rental price, we offer a package of benefits that includes insurance, such as applying a screen protector or equipment configuration. Customers very often ask us whether they have to come to the store to consult on some matter or configure the system. We met their expectations by offering a remote IT specialist service, available around the clock. In the package, users are offered equipment insurance, not worrying about its condition in case of damage – adds Mateusz Kryś.

The flexibility of companies is visible not only in the services offered but also in how the offer is presented.

- Based on our data in the area of brand monitoring, we conclude that companies must be flexible to hit the tastes of their consumers. One such manifestation is the use of the subscription model as a form of promotion. Our digital shelf analyses confirm that rental and subscription are being incorporated into the consumer electronics sales ecosystem, and are communicated both on product cards of equipment available in the promotion, in promotion descriptions, mentioned in promotional banners for specific goods and assortments, as well as implemented on dedicated subpages – explains Miłosz Nowakowski.

According to the Brandly360 representative, the subscription model has permanently become part of the e-commerce landscape. The ability to analyze promotions is an opportunity for business development, as well as an increase in customer trust.

- Referring to our research in the area of monitoring promotional campaigns, it can be predicted that the use of subscription as a way to increase sales in the consumer electronics industry is a type of promotion that has already become part of the e-commerce ecosystem. Especially when we look at global trends, where personalization of the customer shopping experience and brand activities in the area of sustainability are mentioned. We also believe that the further development of this type of promotion may also spark discussion about the sense and need to invest in digital shelf monitoring, where promotion analysis becomes an investment in a stable e-business and increased consumer loyalty – adds the Brandly360 representative.