The pandemic reshaped the economy by sending us into the digital world faster than we expected to, although we were gradually heading there anyway. This has led to a change when it comes to favorable business models, particularly on customer preference as that drives up the financial numbers. One key example is the subscription model, where customers pay a recurring fee, whether it’s monthly or yearly for the company’s products.
Amazon, through its famous Prime model, and Netflix’s core business model are notable examples of this. These are two of the biggest tech names in today’s world, and this model has worked wonders for them. As a result, other companies are starting to implement a subscription model in their businesses and may be familiar to you. For example, Taco Bell, owned by Yum Brands, has introduced the “Taco Lovers Pass,” which allows users to pay $10 for a 30-day subscription that allows them to get a taco every day. Taco Bell cited that customers like the subscription model as it helps with decision-making, which is a handy perk. The percentage of retail sales coming from subscriptions is steadily increasing in the past few years, and it offers users value on certain products. In theory, you could compare it to an all-you-can-eat buffet, where you pay a fee to eat as much as possible. It’s possible this model could become oversaturated in the coming years, but the companies using it are profiting heavily, which could provide some interesting investment opportunities.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.