Jonathan Hurvitz, Teljoy CEO
South African consumers are taking great financial strain at the moment, which may well be the understatement of the year as we battle increasing fuel prices, rising electricity prices, interest rate hikes and sky-high inflation, while rising unemployment only further exacerbates the problem.
Yes, it’s a dire picture, but problems are rarely solved with a defeatist attitude and the fact remains that, regardless of how we feel about it, expenses still come up and needs still need to be met. This is particularly true of the need for consumer goods like appliances, furniture and electronics. Far beyond a luxury, items like a kettle, washing machine, bed or mobile phone can hardly be regarded as a nice-to-have. In too many cases consumers have no choice but to turn to high-interest credit options or costly hire purchase, to afford to provide the things their families need.
Funding these necessities with credit keeps consumers in survival mode, and trapped in a debt cycle that can be almost impossible to escape. This begs the question, “but how else?”. The short answer is that it is time to consider and embrace more flexible, less expensive ways to access and acquire the things we need to lead productive lives. Importantly, solutions that alleviate the need in the short-term but don’t add to the debt burden in the long term need to be popularised as a dynamic alternative to what is essentially the high cost of ownership.
The subscription economy is ideally poised to offer a flexible, sustainable alternative to purchasing on credit. Subscription-based businesses offer the use of their product or service to customers on a subscription basis, as opposed to a more traditional transaction where the customer purchases an item outright. It’s a model that has its roots in technology companies, specifically software, where customers access a service on a “pay-as-you-go” basis.
Practically this means a range of household items can be accessed on a month-to-month basis with the option to upgrade or downgrade, take ownership after the predetermined rental period or cancel the contract at any time. Rather than locking the consumer into an unbreakable contract, it offers flexibility and freedom of choice, along with benefits like maintenance and risk cover included in the monthly cost, protecting consumers should items need to be repaired or replaced.
Worldwide, the subscription economy is growing, as more people come to appreciate the convenience and flexibility of a model that ultimately reacts more dynamically to consumer needs.
In South Africa the subscription economy may still be in its infancy, but its potential is huge. The subscription economy is about people, not products and it is this understanding that gives the model its edge. Reducing consumer debt, too, is about understanding that debt is created by people – too often to satisfy very basic needs. Let’s get the one helping the other by getting comfortable with the idea of access over ownership.
