Back in January, we predicted 2020 was going to be the year of subscription… however our predictions did not even come close to anticipating the turn of events that faced us all.
So much has happened that it seems futile to list the most important events, and not only has the motor industry suffered significantly as a result, all industries have had to look at how their businesses can be reimagined.
Subscription seems now even more perfectly poised to emerge as the next big trend in the motor industry, as customers look for more flexibility and expanded digital options.
We looked at the industry trends which were emerging this decade, namely; Rethinking Ownership, Online Expectations, Increased Flexibility, the Complete Package, and Try Before You Buy.
However, this has reinforced the need in 2020 to rise to the challenge and embrace the key market trends which we had already identified. Online expectations are the ‘new normal’, with customers demonstrating that they are happy to get all but the basic essentials delivered to their doorstep, and the rise of Cazoo evidences this.
Additionally, further flexibility is clearly necessary moving forward, and when purchases are made, the customer wants the complete package (as shown by growing customer demand on our platform) and seem happy to pay the cost for this.
Join us as we re-explore the five identified factors from six months ago in a new light, and examine as to whether they are still relevant; and if 2020 is still the Year of Subscription.
We indicated previously that customers are naturally already rethinking the way that they own things. Within the motor trade this means that long term rentals and subscription is becoming more popular, and the growth of new purchasing models has not slowed down.
Not only that, but it’s now normal to rent an e-bike from a stand for minimal cost to get from A to B, and at a large exhibition earlier this year, it seemed every other stand had a unique take on e-bikes or e-scooters and how to bring them to market.
Ownership is being reimagined, especially when it comes to more expensive or prestige purchases. This is especially relevant for the automotive industry, which has struggled to engage millennials and younger customers in long-term contracts. This difficulty is as a result of their quickly evolving lives; a two-door city car gets rapidly outpaced when kids and dogs start coming along!
It therefore comes as no surprise that most of Wagonex’s user base is aged 25-34, when life moves fastest (although we have customers in their 80s). This demographic tends to reject traditional ownership and as a result are drawn to our solution for their mobility and transportation needs.
I think we can all agree that online expectations by customers have become significantly more commonplace over the last 6 months. When we started 2020 we knew that this would be one of the most important themes, but no one could have imagined just how true this would prove to be. Companies worldwide have embraced this, with e-commerce providers such as Shopify reporting second-quarter revenue increases of 97%.
McKinsey & Co, the worldwide consultancy firm, said it best. On the 1st May they published their ‘From surviving to thriving: Reimagining the post-COVID-19 return’, an article which stresses business’ need to develop their digital solutions to cope over the latter half of 2020. This was not only crucial in the middle of lockdown, with businesses having no other way to sell their products, but they point out this is also a prudent future-proofing exercise.
We discussed six months ago that the likes of Cazoo are going to be on the rise this year, as their success thus far suggested customers don’t need to physically drive, sit in, touch, or even see a car before they’re ready to make a purchase. While the industry as a whole has suffered, we are starting to see a surge of pent up post-lockdown demand. As such, becoming digital is rapidly an expectation, and the industry needs to work together to meet this demand.
If there is anything that 2020 has been able to teach us, it’s that we all need to be prepared to be flexible. In February the Wagonex team attended MOVE 2020, a conference based in London. A month later we were working from home and the very idea of going to a 10,000 visitor conference quickly seemed alien.
Customers are feeling the same, with uncertainty over a great many factors being commonplace.
How, as a business, do we move forward and alleviate customers’ fears? By offering flexible options, especially on larger purchases, we can reassure our customers that no matter what happens they can easily change their circumstances to suit their unique needs and situations. As a trend for 2020, this is already becoming an option. From a Wagonex perspective, whereas we previously had many customers looking at subscriptions for 12-24 months on average, there is now a surge in 1-3 month subscriptions.
Within and outside of the automotive industry, now is the time for small or medium sized businesses to show how they can offer something a bit different, more tailored, and more flexible for customers.
The Complete Package:
Of course, while spending has been restricted on smaller purchases, those who are looking to spend their money are increasingly looking for ‘complete package’ options.
This means that if you can offer a vehicle with tax, insurance, roadside assistance, and all the other trimmings rolled into the price, not only is it easier for the customer (who only has one bill to be aware of, and knows what they pay you each month), but it’s easier for our partners to get their vehicles out the door, and get their company back on track.
“A huge amount of work has gone into building our insurance engine which we see as a game changer for all our platform partners and the wider business.” Toby Kernon (CEO Wagonex)
Try before you buy:
One of the most common requests we get are for our electric cars - our Nissan New Leaf is one of the most browsed vehicles we offer, and we have capitalised on this surge in demand for EVs with Teslas and Twizys galore. Users are clearly attracted by an environmentally friendly alternative, and take out these cars on short subscriptions, treating our service as a ‘try before you buy’ deal.
When we look at the figures for electric vehicles, it’s clear that users want to give them a go but don’t know if they want to commit. They want to know how if they can charge the car in the rain, how long it takes to charge, or how the car sounds and feels to drive on a three or four hour journey. These aren’t questions easily answered in a thirty-minute test drive around the block.
Equally, customers are going for quality, having had their spending limited in the first 6 months of the year. The ability to prove that your product is exactly what they’re looking for is crucial in the crowded post-covid space. With all companies coming back in more or less a tidal wave, customers are overwhelmed with choice. How do you stand out of the crowd? We know that it’s down to having a short trial (perhaps on subscription?) before committing to a full purchase.
So where next?
We are at a crossroads currently. On the one hand the doomsayers are predicting global recession, second waves of the pandemic, and stagnating interest in the motor industry.
However, 2020 thus far has also been an opportunity. If you enable customers to Rethink Ownership, cater to their Online Expectations, offer Increased Flexibility, propose the Complete Package, and allow them to Try Before You Buy, then there are few factors which will hinder your progress.