Subscriptions: The Next Frontier In Environmental Sustainability
In my work with recurring revenue companies, I’ve seen how the subscription business model can be a perfect storm of consumer, business and capital market alignment, and I believe this model is inevitable in many industries. However, one other benefit of subscriptions exists in the notion of environmental sustainability.
To illustrate this idea, let’s start by taking a look in your garage. If it’s anything like mine, you might have a collection of bicycles, lawn equipment and other sports-related gear like tennis racquets and golf clubs. You have purchased all these things, and yet most of them sit there unused the majority of the time. After these items have appropriately aged, been grown out of or otherwise fallen into disrepair, all this stuff inevitably gets tossed into a landfill, far from ever realizing maximum utility.
What if we were able to figure out how to take the inefficiency out of owning all that stuff, and you were able to always have a tennis racquet or a lawnmower when you needed one, and so were all of your neighbors? This is not a hypothetical question. Husqvarna, an over-300-year-old company, recently launched a subscription program for power tools for gardens, eliminating the need to maintain and store tools that aren’t frequently used. As models such as this one become more popular, the utilization of each of those individual tools could increase substantially — and the world subsequently would need fewer of these items. Said another way, if “reduce, reuse, recycle” are key tenets of environmental responsibility, a subscription to most of the items in my garage could allow me to efficiently reduce and reuse.
So while the advance of subscription business models is likely a result of a perfect storm of consumer, business and capital market alignment, I believe we need to add a fourth underlying reason that subscriptions could be inevitable in many industries: Subscriptions can be good for the planet.