10 Subscription Companies to Start Now
The global economy is in the earliest stages of a shift from a transaction economy toward a subscription one.
Microsoft has moved away from perpetual licenses for its software in favor of subscription offerings like Office 365.
Last month Consumer Intelligence Research Partners estimated Amazon Prime surpassed 40 million subscribers worldwide, meaning at an average cost of $99 a year, Prime is a $4 billion business unit for Amazon. But Prime is just one of Amazon’s subscription businesses, which now include offerings like Subscribe & Save, Amazon Instant Video, Amazon Mom and Amazon Web Services.
This explosion of the subscription business model has led to a spike in mergers and acquisitions activity. Witness Facebook’s $19 billion acquisition last year of the subscription-based messaging platform WhatsApp or Charles River Venture’s recent investment of $4 million into subscription-box company Cratejoy.
There are still industries that are just beginning to adopt the subscription business model or have yet to do so. Here are 10 categories ripe for transformation via the subscription business model:
1. Grandparent care
According to AARP, about 8,000 Americans turn 65 every day. Caring for aging boomers will be a big business, and there's an opportunity to create a subscription business whereby kids and grandkids send older relatives a surprise box of goodies to let them know people are thinking of them. Early adopters include GrandBox.
Subscription-based coffee companies have been around for a while, but tea is fast becoming the new coffee with product offerings ranging from herbal tea to supercharged high-caffeine blends. Early adopters offering tea by subscription include Tea Sparrow and Simple Loose Leaf.
3. Farm-to-table eating.
Whether they are proponents of the 100-mile diet or fans of organic products, many are seeking to buy produce directly from farmers who grow it. That’s why there’s an opportunity to offer farm-to-table subscription boxes full of fresh fruits and vegetables, like the early adopter Fresh City Farms.
4. Pet food and treats.
The humanization of pets is a growing trend that lends itself to the subscription model. Pets need regular feeding so a regular shipment of food could replace a trip to the grocery store for their owners. Early adopters include PetShop UK. Pets also might appreciate surprises, which they can get from monthly subscription-box provider BarkBox.
5. Gluten-free anything.
Ever since the international bestseller Wheat Belly was published, a legion of health-food junkies have jumped on the gluten-free bandwagon. Given the challenge of finding gluten-free alternatives to popular food, this space is well positioned for a subscription entrant.
Any time consumers have a regularly occurring task, there's an opportunity for a subscription business but most hair salons cling to waiting for a customer to make an appointment. If a customer needs a regular trim, why not offer a subscription to a haircut provider? Early adopters include Seattle-based Capelli’s, which charges $600 a year for its Executive Signature Haircut Membership.
7. Home maintenance.
Today’s boomers have been called the “sandwich” generation because they are caring for kids and parents, leaving little time for anything else, especially home maintenance.
A subscription-based home-maintenance service could involve a company offering to care for the house of a busy family. Early adopters include Washington, D.C.-based Hassle Free Home Services.
I interviewed Hassle Free’s founder Jim Vagonis recently and he summed up its value proposition succinctly: “When a busy couple gets home at night, they want to put their feet up and enjoy their home. And that what we help them do.”
8. Hobby sites.
Have an obscure passion that others share? That could be the ideal foundation for a subscription-based membership website where know-how is put behind a paywall. Early adopters include The Wood Whisperer Guild, where subscribers can learn everything they need to know about cabinet making for $129 per year.
Virtually everyone is becoming overwhelmed with email, so the handwritten note may be in for a comeback. Subscription company operators could curate a surprise box of stationery for people who enjoy sending a personal note. Early adopters include Austin-based Nicely Noted.
10. Vitamin D.
New research is under way on the benefits of vitamin D and there’s an opportunity to set up a vitamin D delivery business for regular users. Early adopters of the vitamin subscription business include BuluBox.
The industrial era, the space age and the information age all brought massive changes and had implications for consumers and businesses alike. With shift from the transaction economy to the subscription economy, the big winners will be the ones who are first to adopt the new model for their industry.