Subscription POV
By Morten Suhr Hansen
A few months ago, the Danish Chamber of Commerce released their latest report on the development of Danish e-commerce, featuring brand new revenue figures for the first half of 2023. And with those figures came quite a surprise. For the first time ever, the data showed a decline in Danish e-commerce. Specifically, the decline was two percent compared to the previous year. However, there was not a decline across the board. On the contrary, the segment of e-commerce that is subscription-based experienced the opposite trend. Here, the Danish Chamber of Commerce recorded an eight percent increase.
So, while total revenue declined, the subscription economy gained even more traction. Surprising? Maybe not entirely. For one, we have seen more and more new subscription concepts launched in recent years. Furthermore, consumers have not grown tired of subscriptions – quite the opposite.
The figures cover e-commerce alone, but this sector now constitutes such a large part of Danes’ total purchases that I believe it is reasonable to assume that the numbers are also representative of all trade in general. If so, the subscription model continues its growth in the total consumption of Danes.
No roses without thorns. Some subscription companies are still struggling
The reason I emphasize this point is that one could easily get the opposite impression when hearing about major cost-cutting and layoff rounds in the news, even in companies that rely on subscriptions. It’s indeed true that for a number of subscription businesses, it’s noticeable that Danes are also focused on saving money and not paying for something they don’t use. This is especially true for the media and streaming industry, which experienced golden times during the coronavirus pandemic and is now hit extra hard as many Danes have pruned these subscriptions, and perhaps increasingly switch between them instead of having many subscriptions at the same time.
This also applies to a number of subscriptions in more luxury-oriented categories, such as surprise and pampering subscriptions. Due to rising inflation and interest rates, Danes have chosen to indulge themselves a bit less.
Within these two categories, competition is also increasing, so even though the market as a whole is growing, individual players can definitely feel the opposite. This poses very special demands on being relevant to their subscribers and generally having control over all parts of the business.
Focusing on both innovation and excellence
So, what have subscription businesses particularly focused on in the past year? I would like to highlight two things.
Firstly, there is a focus on running an excellent subscription business. This involves having control over all parts of the subscriber’s journey through the company and their interaction with it. This is especially important for ensuring retention and combating churn. When it’s harder to gain new customers, it becomes much more important to retain those you already have. In the fall, we conducted a ‘mystery shopping’ competition, where we systematically reviewed companies’ subscriber journeys from A to Z. The turnout for the competition was overwhelming, and the three winners were thrilled. This tells me that most subscription businesses are currently focusing heavily on excellence in their subscription operations. Or at least, they should be!
Secondly, innovation in existing subscription businesses is highly prioritized. Most have realized that today’s value proposition is not necessarily the same as tomorrow’s. Customer expectations shift, and they often seek even more convenience, flexibility, and personalization in their solutions. At the same time, innovation is an effective defense against new competitors. Thus, many of our projects in 2023 have been about how an existing subscription business can move into new markets.
New subscription offers for the Danes
Fortunately, this year has also seen entirely new players within the subscription movement, whom I’d like to give extra praise. It’s brave and forward-thinking to dare to invest in these times.
Three of them have been developed with our help at Subscrybe. One is myway, a brand new company that offers subscriptions for laptops and MacBooks to its subscribers. We also welcome Sirène, a safety and assault alarm tied together by a strong community. And just a few weeks ago, one of the major players, Nordisk Film Cinemas, went nationwide with the Bioplus Unlimited subscription, where for just 229 kroner a month, you can go to the cinema every evening if you feel like it.
We already know that even more new subscriptions are ready to greet the Danes in 2024.
A cautious look into 2024
Will we see continued growth for subscription businesses in 2024? My guess is yes. At least if we consider the quantity and quality of inquiries we have received in recent months – from both existing and upcoming subscription businesses.
Two areas that I believe will be particularly active in the new year are subscriptions within business-to-business, which I haven’t touched on much here, and within experiences, as exemplified by the cinemas. There’s an indication that a part of Danes’ consumption is shifting from buying products to buying experiences. There lie some exciting opportunities ahead.
An exciting year awaits. Until then, I wish everyone a Merry Christmas and thank you for the year that has passed.
