Subscription business models: Are they also more profitable?

Seeing subscriptions as recurring revenue streams is now well accepted. I believe they are also more profitable.
Consider the case of buying your favourite cereal at the supermarket. You travel to the supermarket (or its .com equivalent); look for the product; you are suggested alternatives with better deals and probably better ingredients; you think whether you want to try the new one; and then you decide (whatever that decision maybe). The repeatability of this purchase depends on the relative strength of behavioural laziness of the customer, the trust the brand has built, product quality vs the competing offer (price, product quality, etc). The shopper has to make a choice each time. And the brand needs to sway the customer towards it each time.
Now consider the same product on subscription: it shows up at your door, every week or whatever frequency you set. The shopper doesn’t get to consider another product. Removing the competition from the decision making process reduces marketing spend, pricing investments, and improves the brand’s profits.
Subscription models change the question for the shopper from “which one do i want?” to “is this good enough?” (Tweet this). Decision making is tiring. Behavioural inertia of the shopper converts to profits for the retailer.
That promise of future profits puts the focus on (the cost of) acquiring the customer, a topic for another time.

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