Why The Food And Healthcare Businesses Love The Recurring Subscription Model That Much.
It’s all about earning a consistent income. But we’d have to be concerned with what businesses we’re subscribing to!
The recurring subscription model is becoming a more popular choice for earning business revenue these days. Whether we’re looking at Netflix, Spotify, or even Uber Eats, what we’re seeing is that there are quite a fair few services that are turning to that model.
As an article in CB Insights states:
Over the last few decades, industries everywhere have begun to adopt subscription business models.
Netflix subscriptions have replaced DVD collections, and Spotify has taken the place of CD shelves. Meanwhile, companies like Blue Apron, Dollar Shave Club, and Stitch Fix deliver everything from dinner to dresses straight to customers’ doors on a “set and forget” recurring schedule.
This is the subscription economy — and the sector is growing fast. Revenue among subscription businesses grew roughly 5x faster than both the retail sector and the S&P 500 from January 2012 through June 2019, according to data from Zuora.
There are several factors driving this growth, including advances in the tech infrastructure that supports it. Perhaps more importantly, the subscription model aligns incentives on both sides of the equation, offering stability for businesses and affordability and convenience for consumers.
Increasingly, subscription models have grown to include companies where the “product” being offered isn’t a product at all — it’s a service, and the value being provided isn’t ownership, but access. For example, car subscription companies are letting drivers rent cars for occasional trips rather than owning one, while fitness brands are turning customers’ basements and living rooms into membership gyms.
The CB Insights article also goes on to state that:
Once a company has started acquiring subscribers and has a solid view into metrics like customer lifetime value and churn rate, subscription businesses become easy to track and predict. Because they’re based on recurring payments, subscription models offer a surer source of revenue that business leaders can count on for strategic planning and investment purposes.
The idea being that there is a “surer source of revenue” involved.
But unfortunately, business and altruism don’t necessarily mix all the time.
Because let’s consider what processed foods are there for.
They’re manufactured cheaply, they taste good, and we find ourselves wanting more of it all the time. Cheap and comforting, shall we say?
Let’s add in to the mix that they can be extremely addictive too. As it is said about the ubiquitous sweetener high fructose corn syrup (HFCS):
So what’s so bad about HFCS, the ubiquitous ingredient so essential to the inner aisles of the American supermarket? A tablespoon of the super sweet stuff packs in roughly 53 calories, 14.4 grams of carbohydrates and 5 grams of sugar, while an entire ear of corn has about 123 calories. It’s much easier to ingest extra, empty calories when they’re processed down to a sugary additive, which enhances the flavor of processed foods.
As an ingredient, HFCS was shown in a 2013 study to be as addictive as drugs, like cocaine or heroin, with salt proven to have similarly addictive, opioid-like qualities.
And we know one thing for sure too. Supermarkets tend to issue store coupons for processed foods, but almost never for fresh meat or produce.
That’s what we’d see on that reality television show Extreme Couponing. People go all out to hunt for those discount coupon codes to load up on a ton of unhealthy stuff — and they think that they’re pretty smart for that.
Well, not when they get addicted to the stuff that they’re buying and proceed to buy more, isn’t it?
When one is at a fast food joint that provides free-flow fountain drinks, would they just drink their fill of one cup, or proceed to get multiple refills?
As a cash-strapped student, I’d go for the multiples to get my money’s worth. And of course, I paid the price for it with weight gain.
We can see that these processed foods do lead to a recurring “subscription”, which is dependent on how addicted we are to those products.
The problem is, when we’re drowning in all these processed foods, what would its impact be on our health?
And when we’re sick, we see the doctor…
The doctor who tells us to take certain pills for certain conditions.
While the symptoms of acute illnesses such as the common cold can be brought under control with the aid of various medications, such that our immune system can then rectify the issue with the infection at hand…
Can that be said about chronic conditions such as diabetes or high cholesterol?
A 2018 article stated that there were more than 35 million people in the United States taking statins for high cholesterol.
But of course, the statins don’t necessarily help someone to achieve a healthy cholesterol level.
And when they don’t…
Would every subsequent visit to the doctor result in the prescription of more statins?
Do we not call that a recurring order now?
People are being finessed out of their money by Big Pharma, and they’re none the wiser for it.
But meanwhile, Pfizer’s statin drug Lipitor netted a lifetime sales record of US$130 billion throughout the course of its 20 year patent.
Impressive returns for a “solution” that isn’t doing what it’s supposed to be doing, isn’t it?
And it’s all part of that subscription business model!
And also, since certain statins may lead to the development of dementia, one protective drug to add on to a cholesterol-lowering cocktail beyond the aspirin and the statin would be a “fairly priced” aducanumab prescription, wouldn’t it?
Unfortunately, if we aren’t aware of these patterns by which the money flows, we’d end up becoming unwise subscribers to these industries. Unwise because that can significantly add up to affecting our financial bottomlines in the years to come.
It’s pretty darn good to get expertise working in those industries, which will be flourishing for years to come. Even better still, invest in those industries.
But please, please, never ever become a repeat “customer” to either of them.
What good is it to have medical science prolong our lives just so that we can pay them more in healthcare bills, especially if we could trace those issues back to those poor lifestyle choices that we made during our younger years?
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