Why own something outright when you can just borrow it more cheaply when you need it?
It’s a question being asked by increasing numbers of consumers, and the companies that deliver to them are responding.
According to a study released this weekend by the Economist Intelligence Unit, 51% of global executives surveyed are considering or implementing new subscription, rental or sharing models of product delivery.
“The shift to new consumption and delivery models is taking place against the backdrop of more empowered consumers, who increasingly seek convenience and better value for money in goods and services,” said Zoe Tabary, the editor of the report.
It’s good news for businesses, she adds.
“Businesses believe that these new models will enable new revenue opportunities, better differentiation from competitors, and access to new customer segments. They will also create new opportunities for businesses to engage with customers on a more regular basis and foster stronger relationships.”
The most popular way businesses are changing their delivery is through the introduction of subscription models, implemented or being implemented by 40% of companies, such as Software as a Service businesses. This is followed by sharing models, where businesses facilitate customers sharing a product among their friends or with strangers (27% of businesses are looking at this).
But even though companies are looking at such things, the revenue impact is still small. Most of the companies surveyed by EIU said these new delivery models add up to 10% or less of their annual revenue. However, 84% of respondents expected this to grow “somewhat” or “significantly” over the next 24 months.
Saar Gillai, a senior vice president and general manager at HP, said the change is being driven by technological advancements and consumer preferences.
“Consumers are getting accustomed to pay-as-you-go models, and they like that flexibility,” he said in the report. “They can instantly get all the capabilities without paying up-front for the cap-ex, and they have better control over their spend.”
However, the growth of new product delivery models could be hampered by legal barriers, the EIU notes.
Some industries are highly regulated, and the legislation simply was not written to allow consumers to access the product in new ways. Complying with data privacy and consumer protection laws were nominated by 27% of respondents as a major stumbling block.