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How subscription models can lead to sustainable consumption

Economic growth has limits. The Club of Rome, a think tank for future questions, noted this 50 years ago. What has happened since then? Many global initiatives, such as the United Nation's Sustainable Development Goals (SDGs), have raised public awareness on the topic of sustainability. But many problems remain unsolved.

Kay Dallmann | Jul 18, 2022 4 min
subscription payments methods

Sharing becomes a business model 

Consumers in the Western world are traditional about shopping: A large selection, everything available at the click of a mouse and directly deliverable. This principle reached its peak at the beginning of the century. The reasons for this are simple: People like to be comfortable, want to rely on tried-and-tested products, and expect low prices.

Almost at the same time, the sharing economy has emerged. People around the world realize that material goods can be shared just as well as music and films. A classic example is cars. This has changed the customer relationship. For a single service, the relationship is no longer with one customer, but with several. All at the same time. This is what we call direct-to-many (D2N) relationships.  

Five important topics regarding sharing economy

Customers are better informed: When it comes to sharing goods, the Internet is invaluable. Information is available quickly and at any time. Customers can book or access services with a single click.

We use goods more intensively: Sharing means living sustainably. What exists is used. There is hardly any waste left.

Relationships are changing: Sharing economy allows us to interact with more people than before. Because sharing a product requires coordination, perhaps even negotiation. In addition, what if something happens? How is this risk perceived?

More sustainable than convenient: Owning something is easy in many ways. Not having to ask anyone and always being able to decide has its charm.

Having access instead of ownership: is that for the future leading to a more sustainable consumption? Is the sharing economy the way to go?

Ownership and other questions 

Subscription models are typical of the sharing economy. Could they help make sustainable consumption more popular? The answer is yes. When done right, this concept can be beneficial – economically and ecologically.

But how can companies and consumers be motivated to share more often?The example of Uber brings us closer to the answer. The idea of Uber is to use your car to earn money. For the owner of the car this means investing time, he has to drive others. For many, the potential income is offset by the risk of having to spend more on car maintenance: fuel, insurance, car wash. And what happens in the event of an accident? All of this is unlikely to motivate people to join the sharing economy.

The situation is slightly different for subscription models.

The one-time purchase amount or leasing rate is replaced by a monthly subscription. This can be more expensive in the long run, but immediately means more flexibility. From the subscriber's point of view, there are further advantages: All costs associated with the car, from insurance to maintenance, remain with the provider. The provider also makes the technology available so that all subscribers can use their account.

This means: A subscriber is more motivated to share his "subscribed" car because his risk is minimized. He does not have to drive and does not have to spend any additional money. Sharing thus becomes a way to utilize assets at a higher rate. And there is no need to constantly produce new assets that consume resources. This could lead the way from a sharing to a subscription economy.

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