The Latest Industry to Ride the Subscription Model Trend: Auto

The facts, trends, and numbers are evident. The subscription industry is growing day by day. Whether you’re looking for ways to discover new organic snacks, or spoil your pet, or get a clean shave, subscription boxes are disrupting nearly every consumer product category and are a major contributor to shifting the e-commerce landscape.

  • The subscription e-commerce market has grown by more than 100% percent a year over the past five years, with the largest retailers generating more than $2.6B in sales in 2016, up from $57.0M in 2011.
  • E-commerce subscribers are most likely to be 25 to 44 years old, to have incomes from $50,000 to $100,000, and live in urban environments in the Northeastern U.S.
  • 15% of online shoppers have signed up for one or more subscriptions to receive products on a recurring basis, frequently through monthly boxes.
  • Amazon Subscribe & Save, Dollar Shave Club, Ipsy, Blue Apron and Birchbox are the five most popular subscription sites in 2018.

These and many other insights are from an in-depth survey McKinsey & Company completed to better understand the dynamics of the subscription e-commerce market and its major trends. The results of the survey, Thinking inside the subscription box: New research on e-commerce consumers is a fascinating glimpse into the current state of the subscription economy.

The latest industry to take hold of this curious trend, the automotive community. Traditionally, options for vehicle ownership were either lease or own. But in a growing number of metropolitan markets there is a third option emerging: car subscriptions.

Marketing and positioning of these car subscription options from brands such as Ford, Porsche, Cadillac, and now Volvo appear to be targeting urban living tech-savvy Millennials who are non-committal towards car ownership, live and enjoy a subscription model lifestyle (Netflix, Blue Apron, Dollar Shave Club) and are willing to pay for the trade-offs of flexibility and options.

For example, the Porsche Passport lets you choose among eight car models (including the 718 Boxster and 718 Cayman S) for $2,000 per month or choose from 22 different Porsche models for a $3,000 subscription. With Porsche Passport, you can switch cars as often as you choose. Cadillac’s subscription service, which comes in at $1,800 per month, lets you swap between cars as often as 18 times per year.

It is still too early to determine adoption of this latest subscription fad. Auto makers have a major hurdle regarding availability as they look to move beyond the main metro markets. It will be one of many trends in the automotive industry to keep an eye on in 2018 and beyond.

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