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Can Product Subscriptions Save the Day in Consumer Financing?

The economy is cooling and leaves no industry unaffected. What does this mean for the consumer financing market? Which innovative financing solutions can save the day?



We have witnessed double-digit inflation in mature economies and interest rate hikes by central banks. Hence, consumers are reassessing their expenses and credit providers’ profits are drying up. For example, the BNPL pioneer Klarna’s valuation has slashed over 7 times and more than 40% of consumers have been late on BNPL payments.


We had a chat with Fairown’s CEO Hendrik Roosna to reflect on this and understand whether providing product subscriptions could be the key. Hendrik also shared insights from this year’s Goldman Sachs Consumer Financing Conference as coping with economic trends was one of the main topics.


Tell us a bit about the Goldman Sachs Consumer Financing Conference and why it is special.

I’ve been looking forward to this high-level conference, since it has been cancelled due to Covid for the past two years. The main value of the conference is professionalism and openness, which is only possible if a small circle of seasoned experts are gathered. Goldman Sachs’ conference is a perfect example of bringing professionals together to add value by sharing analysis about global macro trends, risks, and opportunities.


What was the key takeaway from this year's conference?

The key takeaway from the event was that inflation and the Federal Reserve’s decision to increase interest rates would reduce consumption, which will hinder economic growth. There’s a 50% chance that it will lead the US into a recession, which would probably look less scary than the last economic crisis more than 10 years ago. The reasoning being that companies have strong and not too leveraged balance sheets. Nevertheless, this pessimism is most likely expected to pass in six months or so.


How will the current economic environment affect consumer financing?

Inflation caused by food and energy prices, as well as the rise of interest rates will make it harder to service loans. It will also make credit providers more cautious. This means difficulties in getting a loan, which itself will be more expensive, especially for consumers with lower incomes. This in turn will make it harder to afford the products that consumers desire as instant buyout could not be an option for many of them anymore.


What kind of financing alternatives does this encourage merchants and consumers to seek?

We already see this situation affecting the payments market as e-commerce providers and consumers are seeking alternatives to get better offers for the value of money. New emerging payment options such as offering products as a service could solve issues around high interest rates and consumers’ access to new products while increasing awareness of conscious and green consumption.


For merchants, this means lower risks as they get paid upfront for products and are not taking the credit risk. Also, they get higher margins thanks to smarter ways of binding customers. Subscription means that consumers are willing to pay for access to products and a stronger relationship with a brand or retailer. Increased loyalty generates recurring purchases and lowers customer acquisition costs.


Subscription is very common in the service industry, but has not made a breakthrough in the hardware sector yet. Although, there is a lot to win from product subscription, for example:

  • affordability for consumers thanks to low monthly instalments, no upfront fees nor additional financing costs;

  • an innovative payment method desired by consumers - our survey amongst 4,000 subscription users in the Nordics shows that 70% of consumers buy because product subscription is available. This makes it easier for merchants to increase loyalty and recurring sales;

  • reduced waste for the environment thanks to reselling or repurposing used products. By extending products’ life cycle, their usage is maximised.



If you are curious about how to ensure recurring payments flow and improve customer loyalty by offering products as a service, drop us a line!