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Subscription services show promise

Convenient, novel and affordable, the new business model may catch on

When Ms Raena Lim, 29, launched her designer clothes subscription service in April last year, she expected to cater to 500 customers.

Now, her start-up Style Theory, which allows customers to rent designer clothes at $129 a month, has about 8,000 people on the waiting list.

Other subscription-based firms here are also seeing a boom in business.

Hook Coffee, one of the pioneers in the coffee delivery on subscription business, got more than 10,000 one-time sign-ups since their launch in January last year, and over 5,000 have become subscribers.

The Meat Club, which imports and delivers fresh beef and lamb from farms in Australia, has got more than 500 sign-ups since their launch a year ago, and described their member base as “sticky”.

Subscription-based business is estimated to be worth US$8 trillion (S$11.2 trillion)worldwide, according to cloud-based subscription management provider Zuora.

The business model requires customers to pay a subscription fee to gain access to a product or service over a period of time.

It is also increasingly popular among the young for its convenience, affordability and novelty, as well as the use of technology.

Startup Asia Women (SAW) last month organised a fair for 11 Singapore-based businesses – ranging from beauty, food and beverage, books, fashion, healthy living and flowers.

Subscription businesses may deliver convenience to the consumer, but it involves logistics and operations excellence from the vendor…Startup Asia women founder Christina Teo

SAW founder Christina Teo said more momentum is needed for such businesses here.

She said: “Subscription businesses may deliver convenience to the consumer, but it involves logistics and operations excellence from the vendor, and we don’t have a market size to scale as easily as in the US.”

Style Theory’s Ms Lim, who has a team of 10 working on technology, said data plays a big part in helping the company better monitor customers’ preferences.

Last September, Mr Poon Da Qian, 25, founded Butler in Suits, a home management subscription service that helps home owners with mail collecting, cleaning, laundry and grocery shopping. It costs $240 a month for a weekly visit.

Butler in Suits has a customer base of more than 50.It aims to reach 125 homes by the end of the year.

While marketing experts feel that subscription services will catch on, they are not a threat to traditional businesses, yet.

This is because of customers’ physical proximity to shops, and the fact that many consumers are already online shoppers, said assistant professor Elison Lim from Nanyang Business School’s division of marketing and international business.

Prof Lim, who is also a fellow at the Institute on Asian Consumer Insight, felt that such services face the challenge of retaining customers.

“People may sign up for a subscription first because they are curious, but they may also quickly lose interest and drop off… Keeping customers is what keep businesses going.”



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