The Only Thing You Can’t Subscribe to Now Is Stability
Today’s subscription services cover toilet paper, dog toys, and furniture. But what is lost with convenience?
I’m a person with a toilet-paper subscription. I bought it through my Amazon Prime subscription: Every few months, an embarrassing box of toilet paper arrives at my apartment, at which point I’m charged about $30, which includes the 5 percent saving the retailer awarded me to secure my toilet-paper business in perpetuity.
The same thing happens when the pet-supply company sends me two bags of dog food every six weeks, or when Adobe lets me use Photoshop for another month. Instead of CDs and DVDs, Netflix and Apple Music grant me access to movies and music on a rolling basis. A cosmetics retailer sends me beauty-product samples every month. I never use them, but still pay $10 each time.
For most of American consumer history, subscriptions were the province of magazines, cable, and other media: You paid an annual fee, and news and entertainment organizations gave you their new work as it became available. But as digital-payment technology has improved and people look for ways to navigate stress, stagnant wages, and online shopping’s near-infinite purchase choices, the value proposition of subscriptions has changed. So too have the kinds of products people can subscribe to.
Today, things that can routinely show up at your doorstep include: misshapen vegetables, personalized vitamin cocktails, dog toys, a vast wardrobe of clothing and accessories, and even a sofa. In a consumer market of disposable fast fashion and cheap assemble-at-home furniture, the idea of wasting less while getting to use nicer, higher-quality things for a monthly fee is a compelling sell. But what’s harder to predict is what might be lost when the effort to buy less stuff turns into renting huge swaths of your daily life.
A subscription, at its base, is simply a schedule of recurring fees that gives consumers continual access to goods or services. A car lease is a subscription, but so is your gym membership and the way you use Microsoft Office. Subscription creep dates to at least 2007, when Amazon launched Subscribe & Save, a service that lets shoppers pre-authorize periodic charges for thousands of consumable goods, such as sandwich bags or face wash (or toilet paper), usually at a slight discount over individual purchases. Then, in 2010, came Birchbox, which provides women with miniature portions of beauty products on a monthly basis for $15. At its peak, the company was valued at more than $500 million.
Both Amazon’s and Birchbox’s models have been widely copied, and their success underscores the appeal of subscriptions to businesses and consumers alike, according to Utpal Dholakia, a marketing professor at Rice University. “The pain of payment and the friction of how a person is going to pay is totally gone,” he says. Consumers receive things they need or want without having to make any decisions, and that creates more stable and predictable revenue streams for the businesses they patronize.
The pitch for Feather, a two-year-old start-up that lets consumers borrow suites of furniture for their apartments, sounds a little dystopian. “We don’t own our apartments. We don’t own our cars. We don’t even own movies anymore. So why own your furniture?” the company asks on its website. It isn’t that Feather is wrong; Millennials are less likely to own homes and cars than their parents were at the same age, and streaming services dominate entertainment so thoroughly that Best Buy has largely phased out CDs in its stores. But in the face of all that instability, don’t you at least want your sofa to be yours? Feather says the new normal is “defined by freedom and flexibility.” But generational precarity is hardly an exciting lifestyle.
Jay Reno, Feather’s founder and CEO, is realistic about the frequently less-exciting circumstances of sofa rental; he’s moved almost a dozen times himself. “Most people in our consumer demographic are looking for disposable furniture,” he explains. “Your life is changing constantly, you’re moving apartments, you have a different layout in each apartment and different furniture needs.” The company currently operates in New York and San Francisco, two hyper-expensive cities where young, often affluent people tend to bounce between apartments and roommate configurations. The furniture they need might change pretty quickly, along with the rest of their lives. Although Feather offers terms as short as three months, Reno says most of its customers rent for a full year—the length of an apartment lease.
Rent-to-own businesses have a notoriously predatory history with America’s working poor, but Reno claims that Feather is trying to apply a less vampiric approach to what can be a practical service for apartment dwellers in unpredictable stages of their lives. Traditional rent-to-own models have been accused of profiting off their customers’ desperation, not their desire for flexibility. According to Reno, Feather is targeting educated, middle-class consumers who can probably qualify for in-store financing at West Elm—the same type of people who might have been proudly buying a new dinette set for their young family at Havertys in the 1980s. But back then, those shoppers could expect their dining area to be the same size for the foreseeable future.
If furniture subscriptions might help consumers delay a purchase decision that feels too permanent to handle, Rent the Runway might help shoppers stop making purchases that have gotten too easy. The dizzying variety offered by online shopping and the pressure to look great on social media create an intense incentive for women to continually expand their wardrobe, which can strain both budgets and the physical limits of one’s closet. Rent the Runway opened in 2009 to rent special-occasion dresses, but in 2016, it launched a $159-a-month service that gives subscribers access to a rotating array of everyday clothing. Users can swap out for new pieces when they’re done, or keep things they like for an extra fee.
The same year Rent the Runway’s subscription service launched, the average American consumer purchased 65 pieces of clothing, even though most people use relatively little of their wardrobe. Surveys estimate that only 20 percent of people’s clothing sees the light of day with any regularity. Most individual pieces are worn only a handful of times before being discarded, usually into landfills. At the same time, supercheap clothing is more omnipresent than ever, which can make it seem like a smart, budget-conscious choice for refreshing a seasonal wardrobe or flexing on Instagram.
In theory, a wardrobe subscription gives people access to the variety that modern life demands, in addition to the kind of high-end clothing that it would be impossible for most people to wear every day. “We used to be a business that was more about the cherry on top of the sundae because it was something superspecial,” says Anushka Salinas, Rent the Runway’s chief revenue officer. “Now people are using us as a utility.”
But along with the advantages of variety or quality comes a downside. Whether or not a subscription to breakfast smoothies or Reformation dresses or mattresses makes sense depends on individual consumer circumstances, which Dholakia says people are bad at evaluating on their own. “You tend to overestimate how much you will consume,” he explains. When signing up for meal-kit delivery, you might tell yourself you’ll cook three times a week, when actually once or twice is more realistic. In the case of durable goods, Dholakia says, the trade-off is in the long game: “The consumer pays less, but they don’t get to own the asset and benefit from it.”
Spending $150 a month to lease three different sets of bedroom furniture in three different apartments might give you flexibility, but at the end of those three years, you’ve spent $5,400 and still don’t own any bedroom furniture.
Consumers also seem to be bad at estimating how much they spend on subscriptions. One survey found that when asked to guess their monthly spend on subscription services, Americans’ first guess was about one-third of their actual output. Because people aren’t continuously asked to opt in, it can be easy for those who don’t have to pay stringent attention to their monthly budgets to lose track of what’s being siphoned off. Dholakia says businesses profit from this disregard. “You have to go and revisit all your subscriptions as a consumer every month, or at least every quarter at a minimum,” he explains. He also urges consumers to look carefully at what companies require to cancel service. If a particular program’s terms make it onerous to opt out, that’s a red flag that subscribing may be a bad deal in general.
Dholakia is careful to point out that in companies where subscriptions work, it’s generally because they’re providing a service that people actually want or need, not because the revenue model itself is a golden ticket. Birchbox, one of the early darlings of the subscription economy, has had some well-publicized growth and revenue struggles in recent years as people grew tired of paying to receive a different mini mascara every month. Blue Apron, which has had its subscription meal kits copied by numerous competitors, had more than a million subscribers in early 2017; by 2018, that number had dropped to fewer than 800,000.
Both Feather and Rent the Runway think they have identified places where the things people are supposed to own don’t really line up with the ways they have to live their lives: A lot of people rent their homes for a lot longer now, and the internet speeds up trend cycles and keeps permanent records of every outfit you’ve ever been photographed in. Owning things is great, but the constant pressure to shop and acquire—and especially to do so beyond one’s means as a signal of success—is wasteful of both material resources and money. For some, buying flexibility and novelty without commitment or unnecessary waste might be worth more than an IKEA sofa or a bunch of Zara clothes.
Rental furniture and wardrobing services remain a bandage on a bullet wound; they can’t address the reasons that so many people who might have lived comfortable, middle-class lives a few decades ago now don’t know where they’ll be living next year. Still, if you’re one of the many people who find themselves squeezed by circumstance, at least there’s probably a company out there willing to meet you where you are.
“Every business owner in every industry has thought about or is thinking about if subscription makes sense for their products and services,” says Dholakia. “We’re going to see subscription in pretty much everything.”