Over the last decade, the subscription model has become a prominent feature across industries from streaming services, weekly meal kits, mobility services, to Software-as-a-Service (SaaS) – projected to be worth almost $1 trillion globally by 2028. As the subscription economy extends into new applications including even basic, enabling products, it is becoming particularly relevant in emerging markets.

While subscriptions for anything beyond newspapers and magazines may have seemed like a novelty twenty years ago, today the model has become an attractive – and profitable – model for both businesses and consumers across the globe. Examples of global-scale subscription businesses include streaming services such as Netflix and Disney, as well as SaaS businesses like Adobe and HubSpot.

This shift is transforming and revolutionising the way companies do business and how individuals access products and services. Subscriptions to enabling products are growing in popularity, becoming a beacon for many lacking access to the items they need to uplift themselves.

Benefits of subscription

The subscription model offers consumers the flexibility to experiment, without the commitment of ownership. Consumers gain greater access to products they need and want, in a more affordable way that actually fits in their lifestyle. They have the luxury of convenience with automated, recurring payments.

No longer do they need to make trade-offs between the things they need and want. Subscriptions allow customers to take control over their budget and enjoy life a lot more. In turn, subscriptions can help customers on their path to financial freedom by creating a new way to access products while still managing their monthly budget.

Subscriptions also answer the mounting call for greater personalisation. Companies are leveraging data-driven insights to curate subscription offerings tailored to individual preferences. This trend allows businesses to provide unique and personalised experiences, enhancing customer satisfaction and loyalty.

Consumers are eager to reduce their ecological footprint, and subscription models can support the circular economy, extending the lifespan of products to reduce the need for new manufacturing. When a subscriber is done with a product subscription, and sends the old product back, upgrading with a new subscription, the old tech is re-subscribed to a new loving home.

Subscription taking hold in emerging markets

Emerging markets have historically been hindered in the quest for a subscription economy by factors such as limited access to connectivity, lower computer literacy and the lack of mature payment infrastructure like PayPal, Visa, or MasterCard, which facilitate frictionless subscription payments.

But the situation is changing rapidly: Post-pandemic Africa has seen a proliferation of payment providers across the continent, and a 2022 McKinsey report speculated that the continent’s e-payments market will grow by 150% between 2020 and 2025. This is a clear signal of the emerging markets’ increasing embrace of new modes of consumption, and subscription stands to benefit enormously from this shift.

Some stand-out examples of the subscription economy gaining traction in South Africa are:

• Showmax, a digital streaming provider, has dethroned Netflix to become the preeminent streaming service on the African continent
• Online retailer, Takealot, has launched a subscription service for free deliveries, as a competing offer to Amazon’s Prime
• Sage, a SaaS company with a B2B focus, has seen strong growth in the market thanks to its multiple offerings
• Rentoza allows consumers to access basic products across a wide range of verticals – including smartphones and appliances – through a month-to-month subscription model

Access to enabling products

The subscription model is primed for lower income markets where debt is high, access is limited, and financial freedom is harder to achieve.

Subscriptions offer a doorway to a world where these things become possible once more. It is finance without the burden of debt, as the premise of subscription is that the product can be returned at any time without penalty.

Companies like Rentoza don’t just provide basic access to those unable to secure credit. They allow consumers to embrace new flexible finance, while still accessing the goods and services that are a necessary component of uplifting themselves, such as laptops, smart phones, home appliances, back-up power, baby goods and gym equipment.

Rentoza’s explosive rise reflects the potential of its market: As of the end of March 2024, Rentoza earned 161% growth in sales year-on-year, a nearly 1000% growth in website traffic, and nearly 250% increase in monthly revenue.

Subscriptions to enabling products is not limited to emerging markets. German startup Grover allows consumers to access basic products across a wide range of verticals – including smartphones and appliances  and has expanded across four countries in Europe, as well as to the United States. Dance, also in Germany, offers subscription access to otherwise expensive electronic mobility services, in-house designed e-bikes and mopeds.

Subscribe to the future

In the face of ongoing financial headwinds, consumers are looking for, and willing to reward, solutions that provide access to both essential and aspirational products and services.

Because subscription isn’t just a profitable way to build a business.

It’s the future!