Advances in technology are changing the way consumers buy and use goods and services, but technical complexity is a concern for businesses as they adapt their pricing and delivery models.
According to global research by the Economist Intelligence Unit (EUI), sponsored by subscription platform provider Zuora, 37% of the 293 business executives questioned said technology advances, such as cloud computing, were the single most important driver of the changes in the way consumers access goods and services.
A total of 27% cited economic factors as the main driver and 25% said it was demand for greater convenience.
In the UK, almost three quarters (72%) of businesses reported changes in how customers prefer to access their services, and 48% are introducing new pricing and delivery models. These include subscriptions, sharing and rental goods and services, rather than selling products outright.
Subscription-based models are seen as the main way of addressing demand, with 40% of companies implementing subscription services as part of their core business.
Some 16% of UK businesses said new pricing and delivery methods already represent more than half of their revenue and 72% expect this share to increase somewhat or significantly over the next two years.
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A total of 28% of UK businesses said the new models increase customer loyalty, 28% said they introduce new revenue opportunities, and 30% said they make the business more competitive.
Reduced transaction costs are seen as a benefit to 40% of UK businesses.
But technical complexities are identified by 34% of UK businesses as one of the most significant challenges of moving towards these new models. Organisational challenges (32%) and financial issues (31%) are the other two key challenges identified.
“The shift to new consumption and delivery models is taking place against the backdrop of more empowered consumers, who increasingly seek convenience and better value for money in goods and services. This is creating technical and organisational challenges in implementing new models, but businesses are starting to take advantage of the opportunities they represent,” according to Zoé Tabary, deputy editor at the Economist Intelligence Unit.
Giles Andrews, CEO of UK-based peer-to-peer lending service Zopa, said before embarking on projects to change consumption models businesses must make sure they can make economic efficiencies and are able to offer value to consumers that is better than the alternative.
“Technology allowed us to scale, and to provide checks and balances at all stages of the transaction," he said. "The winners are the ones that can figure out how to build a platform that protects customers while adding value in the market.”