Business Model Trends
AUTOMATED RECURRING PAYMENTS
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Emerging Revenue Streams Through the Convenience of Subscriptions for Parents Subscription models offer time-limited access to a product or service with regular recurring payments. Besides gaining access to content with subscriptions, they can also be completed by paying for a duration upfront, often incentivized by discounts [315]. Especially in e-commerce, where products are shipped in an agreed frequency, the subscription market is expanding [316]. Parents are confronted with an increased amount of work and emotions. They are even more in need of time for themselves and their children than before birth. For this freedom of mind, not having to pay for recurrently needed items and services comes in handy [316]. Overall, as of 2018, the subscription model is specifically popular in IT (40%), digital media (23%), and e-commerce (23%) industries [317]. Children impose an ever-changing needs – be it physical products (e.g., diapers, clothes), taste, and preference (e.g., food, toys), or education (e.g., activities). Compared to investing in single opportunities, subscription models that may save costs and offer an extensive product variety become especially interesting for parents.
Facts: ■
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Parents with children younger than 18 years old are more likely to subscribe to TV/movie (70% vs. 50%), gaming (26% vs. 12%), personal care (11% vs. 6%), clothing (10% vs. 6%), supplies (11% vs. 5%), and prepared meals (8% vs. 3%) services [317]. In general, 15% of online shoppers have signed up for one or more subscriptions to receive products repeatedly [316]. Overall, the e-commerce subscription market has grown by more than 100% per year over the past five years, with sales of 2.6bn USD contributed by the largest retailers [316].
Trend Trend
Scenario
Ideation
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Children put an increasing burden of expenditure on parents. Further, the change in sleep schedule affects parents physically and emotionally [318]. Subscriptions are attractive as they often seem cheaper and give parents freedom of mind. Beyond the initial touchpoint between a subscribed product and its customer, the recurring nature of a subscription enables further touchpoints to expose the customer to a variety of products and services. A subscription is, therefore, a significant driver for itself [317]. Throughout the use of subscription services, parents enter and collect information and build up a network. Lock-in effects drive customer retention and provide stable revenue streams [319].
Challenges: ■
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Consumers may be hesitant to sign up long-term [316], especially when there are no added conveniences or lower prices [317]. To tailor subscriptions to the parents, or respectively children, companies have to invest strategically in using the existing relationship to learn about the needs of their customers while respecting the families' privacy. This is a tricky balancing act. Raising prices is difficult, as this is the most common reason to unsubscribe (56% see this as a reason) [317]. Increasing efficiency is cost-intensive and adapting prices silently, such as by lowering the amount of content, can be a risk for the brand.Incentive alignment becomes crucial for stronger collaboration. For instance, responsible usage of leased equipment [324].
Impact on the Future of Parenting: For parents, subscription products and services offer a convenient, personalized, and often lower-cost way to buy what they want and need. Consequently, they have more time to take care of their children and do not need to continuously keep track of when items in their household run out. As subscription models are often used in the rapidly rising industry of digitalized entertainment and education tools, we can assume that this trend's relevance will grow in the future.
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