Is The Subscription Economy an $8 Trillion Opportunity?

By Aarthi Rayapura August 2, 2017

Excerpts from an article by Matthew Carr in Investment U

Last week, Amazon (Nasdaq: AMZN) CEO Jeff Bezos was briefly the wealthiest man in the world.

He momentarily inched past Microsoft (Nasdaq: MSFT) CEO Bill Gates. And in the process, Bezos became the first person ever to be worth more than $90 billion.

Three of the top five wealthiest people in the world – Gates, Bezos and Facebook (Nasdaq: FB) CEO Mark Zuckerberg – are founders of tech companies.

More importantly, their companies are at the forefront of the changing economic landscape.

And one of the biggest drivers of growth for companies is our continued transition to the Subscription Economy.

Even machinery manufacturers like Deere & Company (NYSE: DE) and Caterpillar (NYSE: CAT) offer data analytics on their equipment. And robotics companies like ABB (NYSE: ABB) are transitioning to a services model.

In fact, Zuora’s CEO, Tien Tzuo, believes $8 trillion worth of economic activity can transition from traditional sales to a pay-as-you-go service/subscription model.

Over the past five years, companies that have embraced the Subscription Economy have seen their revenues grow by an average of 15.1% per year. That’s nine times faster than the S&P 500’s revenue growth and more than four times faster than average U.S. retail growth during the same span.

Consumers, both individual and corporate, love the flexibility. And companies that provide subscription services benefit from the recurring revenue.

Younger generations really subscribe to this trend. We’re still in the first few years of this business model. And those “old school” companies that don’t keep up will find themselves just another casualty.

Read the full article in Investment U.

And for more, download Zuora’s 2017 Subscription Economy Index.