Seemingly small monthly charges are adding up as people "subscribe" instead of owning an asset outright. Analysts and financial planners say the popular revenue model could result in more personal debt and weigh on people's ability to save.
Zach Perret, CEO of fintech company Plaid, said U.S. income is increasingly "encumbered" with recurring payments. He pointed to a few reasons: young people are renting things like cars and furniture instead of owning, installment payments for expensive items like a Peloton bike are more widely available, and subscription services are booming.
"Fueled by venture-capital investments, start-ups have launched these businesses in a wide range of categories, including beer and wine, child and baby items, contact lenses, cosmetics, feminine products, meal kits, pet food, razors, underwear, women's and men's apparel, video games, and vitamins," McKinsey consultant Tony Chen wrote in the company's 2018 report.
She also pointed to Instagram targeting, and use of data. Subscription services seem to find a way onto consumers' social media feeds, prompting them to buy things they might not otherwise. Those recurring payments are easy to forget about since they're on "auto pilot," she said. The revenue model is working well for the tech companies themselves, and isn't likely to reverse. The model has also resulted in some high-profile deals. Unilever bought Dollar Shave Club
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Source: BusinessInsider - 🏆 729. / 51 Read more »
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