A Subscription for Subscription Companies

The rapid proliferation of subscription services has changed the way that we live — notably, companies like Netflix, Blue Apron, and Stitch Fix are names that have risen to the forefront of commerce, upending previous industries. Yet, the disruption of traditional services is visible across all industries — whether it’s in media streaming like Spotify, software as a service (SAAS) providers like Adobe, digital storage solutions, shaving clubs, or an up and coming startup for just about any other product. Indeed, a 2018 survey performed by McKinsey corroborates this trend, describing how “the subscription e-commerce market has grown by more than 100 percent a year over the past five years” with “15 percent of online shoppers sign[ing] up for one or more subscription services.”

This comes at no surprise. After all, subscription-based services confer many benefits to consumers, ranging from convenience and flexibility in replenishing daily supplies, experimenting with new products (with the growing popularity of YouTube “unboxing” videos), or customizing products to personal tastes. There are also plenty of incentives for suppliers to enter: not only do subscriptions facilitate inventory logistics as each company knows exactly how many people are subscribing, but they also reduce retail costs in removing the need to obtain and maintain costly chain stores or storefront employees. Moreover, through subscription services, companies are better able to consolidate and collect information on consumer tastes and trends through their online sales, and can use this data as an empirical guide for future services and products. With the rapid development of the subscription services market in addressing both consumer preferences and supplier needs, this trend is absolutely crucial to understanding the direction of the U.S. consumer goods market.

One fascinating result of these trends has been in the creation of companies who, accordingly, feature a subscription service for helping companies transition to subscription services. One such company is Zuora, founded in 2006 by CEO Tien Zuo. Zuora is a software company that helps client companies move into the subscription service space by providing them with the infrastructure to manage and tailor subscriptions, billing, and orders. It also provides metrics on consumer activity and and revenue, helping guide businesses through pricing and marketing strategies.

While many companies are moving into subscription services, they struggle with setting up the software necessary to successfully manage subscriptions. Zuora provides software and programs to address exactly that, and its current clients range from established companies like The Guardian, Symantec, Tripadvisor, and Deloitte to up-and-coming companies like Yext. Moreover, Zuora is only one example of the resulting demand for moving towards subscriptions, and its competitors, including ChargeBee, Chargify, and PaySimple, are simply additional manifestations of the direction in which commerce is headed. Moreover, with software programs available, more and more businesses will find it easier to adopt a subscription model for their own products and services.

Clearly, the subscription economy is here to stay. As services and products rapidly fall into this new umbrella, it is clear that the way we traditionally think about consumers and suppliers will continue to evolve.