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A Look at the Convenience Aspect of the Experience Economy

Tanner Fink
CX Solution Engineer

What do Peloton, Instacart, Uber and Tide have in common? They’re all upstarts that focused on convenience and have disrupted their industries in doing so.

Today, customers are empowered to buy using their mobile devices anytime, anywhere. In many circumstances, consumers won’t purchase from a company whose experience falls short of expectations.

Imagine calling a taxi service and waiting 45 minutes for your ride to arrive. This was common a mere 10 years ago. A 2018 Business Insider article states that since 2014, the reimbursed ground transportation market share has shifted dramatically in favor of ride-share companies. The total rental car fleet owned 92% of the market in 2014, but shrank to 27.5% in less than 10 years. Customers want their purchase experiences to reflect their valuable time and money. That’s exactly what these four companies are doing to capture incredible amounts of market share.

In the early 2000’s, Procter & Gamble recognized its largest brand in the fabric and household care division seemed limited. Tide laundry detergent had been around for more than 50 years, but it was no longer growing fast enough to support their needs due to a shift away from bigger brands and competition from startups and online rivals.

The P&G Tide brand focused on another line of business, dry cleaning at the click of a button.  According to the US Department of Labor, the average American consumer spends more than an hour a day and up to 375 hours every year sorting, washing, drying and folding laundry. Tide Cleaners now has over 140 franchises that provide wash-and-fold services for college campuses and more than 700 drop-off lockers in apartment complexes, supermarkets, and schools, all serviced through their mobile application.

P&G’s Vice President Sundar Raman, states, “Our goal with Tide Cleaners is to help people’s increasingly busy lives revolve more around what matters, and less around their laundry.” P&G has invested their money into our time and has made their footprint in the Convenience Economy, growing 12% more than the industry over the first six months of introducing Tide Cleaners. The Tide Cleaners brand now accounts for 2.5% of the U.S. dry-cleaning industry’s $9.1 billion in annual sales and is growing at a significant rate. Disrupting their industry with convenient services has been a success, but there is more to a successful line of business that these disrupters are adopting.

Convenient services require a simple, yet profitable pricing method. The most profitable pricing strategies put customer value front and center and are guided by customer data that match customers’ purchase and usage habits.  It’s no surprise that subscription pricing is a thriving business model where the customer pays a fee to have access to a product or service over a given period of time.

For example, Peloton’s pricing strategy has matched their convenient service model, elevating the overall experience for their customers. Purchase the bike for $0 down payment, $58 a month, 0% APR and pay a monthly subscription of $39/month for unlimited access to live or on-demand classes. That’s $97 a month for unlimited classes, not limited to a single person. Boutique spin gyms can range anywhere from $20 to $35 per class/per person. Peloton’s low overhead costs, due to no studio leases/amenities and no cleaning/front-desk staff allows them to provide a competitive hardware to subscription based pricing model that fits perfect with their at-home workout service. Peloton’s subscription revenue grew to $181.1 million in 2019, up from $80.3 million in 2018. Consumers will typically pay more for a convenient service, but Peloton customers are saving money and getting the at-home convenient workout they strive for.

Now, instead of waking up and dreading your trip to the dry cleaners, gym and grocery store you can start your day by dropping your clothes off at a Tide Cleaners drop box, order your groceries from your mobile phone on Instacart, get your morning workout in on your Peloton bike and take your Uber to work. Time is money and consumers are expecting these types of services moving forward.

Learn about how Oracle can help your organization enter the convenience economy by clicking here to read about Oracle Subscription Management and how it can help drive new business models and enable recurring relationships to generate additional revenue from your goods and services





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Comments ( 1 )
  • Debi Shupe Wednesday, February 19, 2020
    What a great case study with Tide on finding a new revenue stream that meets the needs of consumers today. All businesses need to reinvent while leveraging their brand strengths!
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