Savvy companies are reaping the rewards of the subscription biz: predictable, high recurring revenue, plus a competitive, sustainable business model — and potential global ROI is huge. Learn how to best expand your subscription business worldwide when you catch up on this VB Live event!
“The growing ecommerce markets across the globe are beckoning, especially for firms that are selling solely digital goods or software that are freed from the constraints of physical fulfillment,” says Forrester analyst Lily Varon. “There isn’t one ecommerce market Forrester tracks that is shrinking, and the second wave of markets beyond the English-speaking world is quickly accelerating and becoming a priority.”
That means there are huge opportunities in big, mature markets like China, Japan, or South Korea, but also other earlier-stage ecommerce markets like India and Mexico, and big markets where social, political, economic, or regulatory turbulence has presented challenges to their growth, like Brazil.
“Consumer demographics such as Gen X and millennials that are coming into their own as key components of the purchasing market are very strongly engaged with subscription services,” says Patrick Unnold, VP customer at Recurly “We think that’s really going to drive — not just in the U.S., but internationally as well — a significant ongoing trend toward subscriptions.”
The growth is not just from newer businesses, but also existing, established companies, and running the gamut from new ideas like box-of-the-month clubs and OTT (over-the-top) service providers to automotive and consumer packaged goods jumping into the subscription style of services.
“From a payments perspective, we see tremendous growth in subscription billing as a model, as a framework for interacting with customers,” says Luke Salinas, SVP strategy at Adyen. “In general, we see a shift from transactional commerce to transformational commerce, toward the kinds of brands and services that consumers will engage with over a long period of time and develop a kind of loyalty that creates opportunities for recurring revenue.”
But the moment of payment is in many ways the moment of truth for these subscription businesses, Salinas adds.
“No customer acquisition strategy, no matter how good, will yield fruit if consumers don’t have the access they need to pay for those goods and services,” he says.
In recent years, there’s been a trend not only toward subscription models, but toward increasing complexity and sophistication on the part of merchants hiring more dedicated payment resources, and focusing more of their time and attention on making payments work for consumers.
That’s especially essential for global expansion, as managing the subscription business model, or a business model that’s a hybrid of multiple forms or flavors of monetization, becomes exponentially more complicated when you start considering jumping into brand new markets.
Subscription businesses face many of the same challenges that businesses in more traditional ecommerce models face when moving internationally, but with some unique emphases, Salinas says.
The first one is the challenge of working with differences and subtleties in different regulatory regimes internationally. That typically centers around the question of whether to sell into a new market on a cross-border basis or establish a local business entity, a local team, a locally relevant business.
The second big challenge is access to locally relevant payment methods. In some markets, card penetration is as little as two or three percent. Even in markets where card penetration is higher, preference around consumer shopping online often leans toward other payment methods, whether it’s direct debits or ewallets or online banking methods. Access to those methods of payment that are really relevant to local shoppers is a huge challenge for many merchants.
Another big bucket is dealing with fraud risk. Many markets are just inherently riskier than the U.S. in terms of fraud, with a higher incidence. Some markets have real structural vulnerabilities that merchants have to think through. For instance, things like prepaid gift card fraud; gift cards are especially popular in the U.S. and include open-loop gift cards which can be used virtually anywhere. Or something like direct debits in Europe, where consumers have an unlimited, no-questions-asked right to dispute those transactions for, in some cases, many weeks after a purchase. Merchants have to guard against friendly fraud in a way that’s not necessary in a market like the U.S.
In the end, he says, every market has a pretty unique set of challenges. Exactly which of those challenges are front and center depends a bit on what you’re selling, how you interact with your customers and which market you’re tackling.
“It’s the global local, or glocal,” Varon says. “You have to have a strategy that enables globalization from a corporate perspective, and then a very specific localization strategy to take on a market-by-market basis.”
Are you ready to start thinking about launching worldwide? Learn more about how to avoid everything from cultural missteps to legal mishaps and go big so you don’t have to go back home, when you catch up on this VB Live event.
Don’t miss out!
Webinar attendees will learn about:
- The opportunities provided by the explosive subscription model growth around the globe
- How to overcome regional challenges, including local payment methods, regulations, data security, and taxation
- How to identify knowledgeable partners to accelerate your global expansion
- How localized communications throughout the subscription lifecycle boost subscriber retention
- Common fraud issues to anticipate and how to mitigate them
- Patrick Unnold, VP Customer, Recurly
- Luke Salinas, SVP Strategy, Adyen
- Lily Varon, Analyst, Forrester
- Rachael Brownell, Moderator, VentureBeat
Sponsored by Recurly and Adyen