Under the impact of advances in technology, economic pressures and shifting cultural norms, consumers are looking for cheaper goods and more convenient ways of accessing them. New models of personal ownership are gaining attention in many industries based on the idea that people are increasingly interested in consuming and paying for temporary or limited access to goods and services, rather than purchasing them outright.

Judging by this Economist Intelligence Unit survey, businesses are responding by changing how they price and deliver goods and services, with subscription-based models in which companies offer ongoing access to a product or service for a periodic fee; rental models that give consumers temporary use of a product or service; and sharing models that allow groups of people to jointly share ownership of a product or service among the preferred options.

Advances in technology are enabling this trend, both by giving consumers greater insight into where and how they can access products and services, and by allowing businesses to rapidly ramp up new sales models at relatively low costs.

Businesses believe that these new models will enable new revenue opportunities, better differentiation from competitors, and access to new customer segments. They will also create new opportunities for businesses to engage with customers on a more regular basis and foster stronger relationships.

For consumers, reduced transaction costs and more convenient use of goods and services should be the biggest benefits. But adapting to these new consumption and delivery trends will not be easy, and they will not impact every product or business in the same way. Financial constraints, technological complexity, shifting regulations and the need for new marketing strategies and extensive change management are just a few of the challenges that companies must address to succeed in this transition.

 The key findings of this research include the following.

• A majority of businesses are changing the way they price and deliver their goods and services.  Four-fifths of respondents see changes in how their customers access goods and services. For individuals, subscriptions and rental options are the most appealing consumption models to emerge from this trend. As a result, over one-half of companies (51%) are changing, or are in the process of changing, how they price and deliver their goods and services. The biggest change is the introduction of subscription options for goods and services (implemented by 40% of companies), followed by the enabling of sharing models (27%).
   
• The revenue impact is still relatively small, but is expected to grow steadily.   More than one-half of the companies surveyed report that these new delivery models represent 10% or less of their annual revenue, and 12% say that they represent more than 50% of revenue. However, 84% of respondents anticipate that the share of revenue will change “somewhat” or “significantly” over the next two years.
   
• Technology is proving a powerful enabler of new consumption and delivery models. “Any area where you’ve got fairly expensive goods that customers don’t feel like they have to own, and enabling technology that allows them to easily use them, will be open to transitions in business models,” says Aleyn Smith-Gillespie, associate director at Carbon Trust Advisory Services.
   
• Consumers benefit from cheaper, more convenient products, while businesses generate new revenue streams. “Consumers are getting accustomed to pay-as-you-go models, and they like that flexibility. They can instantly get all the capabilities without paying up-front for the cap-ex, and they have better control over their spend,” points out  Saar Gillai, senior VP and general manager at HP. For businesses, the leading benefits are access to new revenue opportunities (37%), differentiation from competitors (27%), and accessing new customer segments (27%).
   
• Cost, technical complexity and regulation may hamper the implementation of new consumption and delivery models. Internal co-ordination (selected by 33% of respondents), technical complexities (30%) and compliance regarding data privacy and protection (27%) are viewed as the key difficulties in implementing these new delivery models. Regulatory hurdles can also be a stumbling block for lean start-ups, according to experts.   

Each company faces a different set of circumstances, but there are some common elements all should think about, say executives interviewed in this report. Backing new delivery models with a strong business case, developing a seamless user experience, working with regulators and monitoring corporate reputation are some of the specific areas which new delivery models need to encompass.

For more information on the report click here