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In this blog, you will learn why there has never been a better time to launch your Product-as-a-Service or subscription business. If your business has experienced channel conflict when trying to start a direct-to-consumer proposition, the current crisis could present a significant opportunity for you.
We're living in a time of big changes. While the height of the COVID-19 pandemic is behind us, its impact has stuck around, especially when it comes to how we shop and do business. Consumer habits have shifted, and many retailers are still figuring out how to keep up. From supply chain issues to the rise of online shopping, traditional retail as we knew it is facing new hurdles.
But if there's one thing we learned from the past few years, it's that merchants are resilient and adaptable. When lockdowns hit, restaurants started offering delivery, hairdressers sold future appointments, and almost everyone switched to remote work. E-commerce became a lifeline for many, especially for businesses that were previously slow to embrace digital solutions.
Now, in 2024, the role of retail looks very different. Physical stores aren’t just about making sales anymore–they’re places for experiences, click-and-collect services, and showcasing products for online buyers. Retailers who think beyond the traditional store model are the ones finding success. This is where ideas like Product-as-a-Service (PaaS) and subscription services come in.
These models let you build a lasting relationship with customers, offering value over time and creating a steady stream of income. Plus, with more people interested in sustainability, PaaS fits the growing trend of customers preferring to rent or subscribe rather than own. So, if you're looking for new ways to grow your business, now's the time to rethink your approach and tap into these exciting opportunities.
As former Dutch Prime Minister Mark Rutte once said, “People who think that after this crisis everything will be the same as before are living in an illusion. This crisis, however, does provide opportunities to rethink how we would like the world to be.” And this applies to businesses too, especially in retail. There's no better time than now to rethink your business model and make it more sustainable and future-proof.
With fewer customers coming into stores for inspiration or service, businesses need to meet them where they are—online, at home, and on their own terms. This is where PaaS and subscription models come in. These business models not only create direct relationships with customers but also let you sell to them more consistently.
Plus, PaaS has the potential to drive us closer to a circular economy by focusing on use over ownership, which can benefit both businesses and the environment. It’s a win-win opportunity, creating a more sustainable future while building stronger customer connections.
A product never exists in a vacuum. Customers use your product to achieve a desired outcome, and the most successful products recognize this. The best businesses offer services around these products to ensure users get the results they want. As a B2B merchant or one that primarily sells through conventional retail channels, you likely work with channel partners. This means you might lack a direct relationship with your end-users and customers. Subscription and service models can help you build that direct connection.
Normally, when considering a subscription or PaaS business model, or launching an e-commerce channel to connect directly with your customers, you have to consider your existing relationships with traditional retailers. Building a direct-to-consumer (D2C) strategy might seem risky, and your retail partners may have concerns. But they don’t need to be worried. Here’s why.
Most retailers understand that the way we do business with end customers is changing. Ultimately, as a merchant, your goal is to acquire and retain customers, even in changing times. Getting involved in new business models like PaaS or subscriptions early on will allow you to respond to these changes more quickly and at scale. Some of these changes have been accelerated by the COVID-19 crisis.
If you provide enough value, you can succeed, and even your retail partners will be willing to collaborate with you. Here are a few quick tips on how to work with your retail channels, rather than bypassing them:
Retail channels are unlikely to disappear; they will continue to offer valuable touchpoints with customers. However, even as shops reopen and shopping streets become busy again, the need to rethink retail remains a pressing issue. So, you should also:
Time will tell how the market evolves, but in the meantime, choose to collaborate with your retailers, as you can benefit from their location-based advantage in retaining customers. You're meeting your customers where they are, offering more convenience, inspiration, and services—right at their doorstep. Not only that, by implementing Product-as-a-Service, you're providing a flexible option. Unlike a traditional purchase, PaaS offers consumers the freedom to opt out easily, making it a more appealing and commitment-free choice.
Right now, many consumers may be hesitant to make a big investment in a product, like a washing machine, even though they still need it. This presents a significant opportunity for Product-as-a-Service. One of the key strengths of PaaS is its flexibility—customers can opt-out easily if needed. In the short term, introducing PaaS is a great way to tap into a new market of customers or convince potential switchers that your solution meets their needs without the long-term commitment of a purchase.
The result of this model is a lower barrier for new customers to start using your products instead of purchasing them outright. Depending on the (monthly) cost of your product, it's often quicker for a company to approve temporary operating expenses rather than making capital investments.
Currently, you are competing with other manufacturers or businesses that sell similar devices, and the competition is primarily based on product features such as size, color, aesthetics, price, ease of use, etc. This leads to a constant battle involving marketing costs, social media campaigns, and retail channels. Introducing a D2C PaaS model for your products or devices would allow you to compete beyond your current market.
If you are currently selling through conventional retail channels, do you truly know your customers? With a PaaS model, you can engage with your customers more directly, gaining individual insights and valuable feedback. This feedback can be used to improve your services, product design, and performance.
In conclusion, there has never been a better time to launch your PaaS or subscription business while minimizing channel conflicts. The current challenges don’t have to stop you from innovating your business model or risking significant revenue loss. In fact, there’s an opportunity to not only sustain your business but potentially increase your revenue.
Interested in launching your Product-as-a-Service or subscription business? At Firmhouse, we can help you get started with either proposition on our platform. We fully automate all back-end processes, allowing you to launch quickly and efficiently. Visit our website for more information, or contact us to schedule a demo.
