June 1, 2020

The Wave of Subscription Services is Spreading to B2B

Subscription services, such as movie and music streaming, were directed first at general consumers. In contrast to leasing, subscriptions have short-term contracts that can be easily terminated from the user side, and they allow users to receive the latest products and services at all times. On the provider side, providers can analyze customers’ usage patterns and make timely offers of related services and products, aiming to lock in customers and generate stable earnings. The same is basically true in B2B.

North America and Europe lead with subscriptions
Surf Air in the US is a service which provides unlimited use of private jets for around JPY200,000 per month. Users drive their cars into a dedicated parking lot and board the jet with no boarding procedures. The service has over 3,000 members. It has operated 75,000 flights in the five years since it was founded, carrying a total of 250,000 passengers.

Michelin of France has a service which charges for tires according to the distance driven. The service is a one-stop provider of tire maintenance, replacement, and disposal, so its customers can always use new tires. The service is used with over 300,000 tires, in France and 23 other countries.

Always the latest model, with no extra charges
Toyota Industries has started fixed-charge billing for high-performance autonomous carrier vehicles. The automated guided vehicles (AGVs), which carry cargo in warehouses and elsewhere, cost JPY133,500 each, per month. When a newer model is developed, upgrading to the newest model is free of charge. Software can be updated remotely and automatically, so customers can always use the latest model, with no extra charges. Service providers maintain long-term contacts with the customers, and can apply usage data to the development of new products. Subscriptions are seen as a new business model by which companies pivot from sale of goods to services, to raise their earnings while constantly providing value.

Sources: ICT Research & Consulting

Sources: ICT Research & Consulting