Amazon Killer? Time to look at subscription models…?

Today’s ramblings are about a new rival to Amazon – Jet.com.

Jet is already being courted by Walmart as it looks to beef up its online distribution model. With 12m lines already, Jet is looking to attack Amazon’s seeming dominance of the online market by offering household goods at cost price. Customers are rewarded with further reductions for buying in bulk.

So how does Jet make its money?

Via a yearly subscription of course – $50 per year. Not a lot in of itself but potentially huge if it gains mass take up. Whatsapp showed us the power of subscription models with its $1 dollar annual fee (pre Facebook days) – not wholly exciting until it reached 200m+ users and therefore a tidy $200m per year. Also, more recently, Dollar Shave Club?

I am a huge fan of subscription models. Think monthly Saas subscription business models; membership plans, continuity programs etc. A recurring income flow. Predictable revenues with no receivables to chase. Highly attractive to prospective purchasers if you are looking to build a company to exit.

Have a think how you can add the subscription model into your business, if you haven’t already….?

 

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