Subscriptions have become commonplace. From digital content to home appliances and furniture, many companies in a wide variety of industries have entered the subscription business. The market value has also been rising steadily year by year, with the domestic market size expanding from approximately 562.7 billion yen in 2018 to approximately 943 billion yen as of 2023.
This trend is expected to continue in the future, and it is said that it is only a matter of time before the market size exceeds 1 trillion yen. The background to this enormous market size is the spread of smartphones and Wi-Fi, and the shift in consumer needs from ownership to usage, but at the same time, some companies that have entered the subscription market have failed in the subscription business.
In the automotive industry, GM (General Motors), a major American company famous for Buick and Cadillac, and BMW, a major German company, were the first in the industry to enter the subscription business and develop services.
In particular, GM launched a groundbreaking service that allows customers to freely choose up to 18 Cadillac models per year and use them all-you-can-use for $1,800 a month. Although it was able to secure some users temporarily, the costs were higher than initially expected, and it was not profitable.
This is not limited to GM. Ford, another major US company, withdrew from the subscription business for the same reason as GM. It sold its car subscription business "Canvas" to another company.
BMW also significantly reduced its monthly fee from the initial set price of $3,700 to $2,699 and from $2,000 to $1,399, making it possible to use the service at a lower price, but it eventually withdrew from the subscription business. In Germany, in addition to BMW, Mercedes-Benz and Audi have also withdrawn from the subscription business.
It is believed that German companies struggled not only with costs but also with attracting customers. In the automotive industry, companies gradually entered the subscription business from around 2018, but many companies ended up withdrawing from the subscription business by around 2021.
Looking at Japan, apparel manufacturer AOKI launched a service that offered suits, shirts, and ties selected by a stylist according to taste and size for a monthly fee of 7,800 yen, but withdrew from the service just six months after it began. The reasons for the withdrawal included higher-than-expected operating costs for warehouses and cleaning, an inability to offer a wide range of designs and variations, and low customer satisfaction.
Another apparel manufacturer, ZOZO, also launched a subscription service called "Omakase Regular Delivery," but sales did not increase because there were few financial benefits such as it being cheaper to buy on sale, and it did not meet the needs of members, so it withdrew from the subscription business.
As such, there are many cases in which many companies in various industries have entered the subscription business but quickly withdrew.
The main reason for this is that the cost is not profitable, but as in the case of BMW, it is not enough to simply set the price low; it is important to set a price that is commensurate with the service, and it may be necessary to provide "value" for the service beyond just low prices.
Many car manufacturers have withdrawn from the subscription business between 2018 and 2021, but on the other hand, subscriptions that provide some of the car's functions rather than the car itself are increasing.
For example, GM and BMW offer services that allow users to use security and driving assistance functions such as drive assistant functions for a monthly fee, while Tesla offers a subscription service for autonomous driving software.
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