E-retail experienced a spike during the Covid-19 pandemic after the widespread disruption felt by consumers and businesses in this period. The e-retail market is expected to grow to $120–140 billion by FY26, increasing at approximately 25-30 percent per annum over the next five years, according to the report ‘How India Shops Online 2021’ by Bain & Company.
India's retail industry is witnessing a paradigm shift as players transition from unorganized to organized sectors. Small and medium enterprises are working towards the formalization of their companies to ensure growth. The ongoing pandemic has furthered the shift towards the organized industry as retailers offer new schemes and services to stay ahead of their competitors and provide something unique to consumers. Technology has played a pivotal role in this shift, along with the growth of mobile commerce. The pandemic, in particular, has sparked a tremendous rise in mobile internet users, who are now potential customers for every new business.
We have seen rental at the heart of retail industries over the years, from the renting of cars, houses, furniture to even clothing. In the same way, the rise of subscription services has proven it to be a win-win model for both customers and brands. From a market size of around Rs 1,200 crore in 2017-18, subscription businesses in India have grown exponentially. Subscription commerce, which began with newspapers, magazines, and newsletters, before really becoming the norm through OTT and entertainment services, could now define the future of the Indian retail market.
Currently, the common notion between Millennial and GenZ consumers is ‘why limit me to one product when I can have the option of an entire catalog?’ The subscription model offers both flexibility and affordability to a large demographic of consumers. They can enjoy access to many products and services that they otherwise could not afford at a fixed price and for a given time. Once that period elapses, the customers can try different products and services available in the market, rather than being forced to stick with their initial choice.
Customers who opt for the subscription model can enjoy the benefits of these services, often from the comfort of their own homes. Time and money are valuable considerations for consumers so companies are bound to leverage this growing preference for subscription services that offer both. It also allows companies to consistently engage with customers throughout the subscription period, building and maintaining customer relationships to enhance their experience with the brand. Over time, customers see more relevance in communications from these brands and grow more comfortable engaging with them or reaching out to them for help. These are just a few ways the subscription model directly improves brand loyalty while garnering valuable insights on customer preferences.
Subscription models have taken time to gain a foothold in India but this has changed with the growth of startups and companies that offer tech-driven solutions. There is no end to what the subscription model can offer to customers. The recent success of the subscription model across industries, as seen with furniture products and home appliances, has proven the immense value of these services and the presence of a massive market for them.
I believe that India is prioritizing the growth of digital offerings across industries, especially after the pandemic. The average customer would prefer browsing for products online that can be delivered to their doorstep rather than venturing out to malls and showrooms. These factors have contributed to an enabling ecosystem for subscription-based services to thrive in the coming years.