The global subscription economy is growing by $51 billion dollars in 2022
Subscription POV #22
By Morten Suhr Hansen
The subscription movement is rolling and the pandemic has given subscription companies around the world another push in the right direction. That is the common assumption among all of us who are involved with subscriptions on a daily basis. But how large is the collected subscription economy? And how much is it growing in total? That is what American analysis institute Juniper Research is looking into in their comprehensive yearly analysis ’Subscription Economy: Future strategies & market forecasts 2022-2026’.
The analysis is built on data from all over the world and on concrete numbers from 27 countries, including Denmark, Norway, and Sweden, and, according to the report, the collected global subscription economy in 2021 was at $224 billion dollars. That number will grow to $274 billion dollars in 2022.
These numbers alone are staggering. But it’s equally interesting to look at the growth from 2021 to 2022, which is $51 billion dollars! In other words that is an increase of 23% – in one single year!
Subscriptions to physical products are driving a large part of the growth
One of the more surprising metrics from the Juniper Research report is the share of physical product subscriptions. Normally when we think about the subscription movement, we think of the digital subscriptions on software and streaming that we keep hearing of. But actually, physical product subscriptions account for 45% of the collected global subscription economy and, it’s one of the categories that are growing the most in these years.
A large part of the growth is driven by the pandemic since consumers all over the world have felt a need to get goods delivered to the door and here, the subscription model has come to fruition. Namely, because it adds an important element of convenience for the modern consumer. Take meal boxes as an example.
In Denmark, we have known Aarstiderne with their meal boxes for years, however, in Denmark, we’ve seen a big boost for meal boxes as well. And in many markets, where meal boxes are still new, consumers are learning how convenient it is to have others create the dinner plan and recipes so the time in the kitchen is so much easier.
Another example is medicine. The trip to the pharmacy has not been equally fun for everybody, even though pharmacies have been open throughout the pandemic. Sadly, it is not yet possible to get medicine delivered in a subscription, but in other countries, it is a service that more and more people are making use of. In the US, Pillpack is the leading supplier of medicines on subscription. Every month subscribers receive all of their prescription medicine, vitamins and health products packed in little dose packages that help you get the right amount of medicine at the right time. Unsurprisingly, Pillpack was acquired by Amazon in 2019. This has only pushed growth even further.
Surprise boxes and long-lasting consumer goods on subscription is seeing massive growth as well
Obviously, meal boxes and medicine are just a few among many, many physical product subscriptions that are growing these years. The market for curated subscription boxes is also moving fast. And even luxury products such as wine and personal care are growing in popularity.
We also subscribe to long-lasting consumer goods such as glasses, hearing aids, cars, bikes, washing machines, and much more. This market – let’s call it Assets-as-a-Service – is really exciting to dig into. I will do that in one of my coming ‘point-of-views’.
Will growth for subscription companies keep going?
Naturally, the million-dollar question is, if the development of the subscription movement, including physical subscriptions, will continue with the same strength when the pandemic is over. According to Juniper’s report, the answer is yes. At least on an international scale. But I am sure that the growth will continue in Scandinavia as well.
This doesn’t change the fact that we have customers right now, experiencing that their growth is stagnating. But these are companies that have had a wild ride. We have customers who experienced a growth of 50% in the first year of the pandemic. Obviously, this couldn’t continue.
But for many, many customers, the past year has been a game-changer. As soon as we’ve tasted the curation, the convenience, and the inspiration that lie in many of the best subscription concepts, there is no way back. And there are still many businesses that are still waiting to step into the world of subscription. This will happen in the coming years.