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Subscriptions for physical goods to hit $263bn by 2025, overtaking digital subscriptions

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Subscription retail is growing rapidly (Image: Fotolia)
Subscription retail is growing rapidly (Image: Fotolia)
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Subscriptions for physical goods is on the up and it will become a bigger industry than digital subs report says

The market for consumer subscriptions for physical goods will grow from an expected $64 billion in 2020 to more than $263 billion in 2025, a new report from Juniper Research suggests.

 

These offerings, providing physical products on a recurring basis, will overtake the market for consumer digital service subscriptions in 2022, despite the significant lead the digital sector has had in this area, as many different consumer businesses seek to boost recurring revenue.

 

The new report, Subscription Economy: Industry Disruption, Value Chain Analysis & Market Size 2020-2025, notes that the COVID-19 pandemic has brought the physical goods subscription economy into common awareness. With this broadening awareness, Juniper Research expects the market to triple in value over the next five years.

 

The report notes that there are few industries that are not amenable to a subscription model; making subscriptions a possibility for many different types of goods. Juniper expects a global average of two physical goods box subscriptions per subscriber by the end of 2025, in the same way that multiple digital video subscriptions are common.

 

Consumers in North America and West Europe will generally use more than this, as logistical networks are more solidly in place and subscription models in general are more established.

 

Multi-service subscriptions to rise

The report also notes that multiservice subscriptions, that provide several services for a single cost, will be a $69 billion industry by 2025. In contrast to many sectors, these will be led by offerings from tech conglomerates, like Amazon’s Prime service and the Apple One subscription. These offer multiple digital services together in a way that many competitors cannot.

 

“The digital subscription market will be heavily disrupted by multiservice offerings,” says research author James Moar. ‘Physical subscriptions are insulated against this to a degree, as many are produced directly by the goods providers. However, we expect some subscription marketplace providers to play an analogous role in the coming years.”

 

Research by Bazaarvoice in the summer suggested that consumers are more than into the idea of subscriptions already, with 5% of them already having at least one subscription running. While this sounds small, it is growing rapidly: a Barclaycard study found that subscriptions have leapt up by 50% over lockdown and that UK consumers now have an average of seven per household and spend around £46 a month – £552 a year – on subs.

 

As a result, around a fifth of UK retailers have launched subscription services during lockdown, bolstering the 30% of retailers that already had them in place.

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