Subscription plans have not only lowered the barriers to access for premium gadgets, but have also drawn those who prefer not to own a gadget for an extended time. — CHONG JUN LIANG/The Straits Times/ANN
SINGAPORE: Adopting the latest tech gadget need not come with a hefty price tag now that subscription-based services for electronics have become increasingly common.
Startups such as Circular and ITEZ.SG allow people to tap affordable and interest-free subscription plans that enable them to “rent” all sorts of devices, including laptops, phones and tablets.
Not only has this option lowered the barriers to access for premium gadgets, but it has also drawn those who prefer not to own a gadget for an extended time.
For instance, ITEZ.SG offers subscription plans for a variety of products such as Windows notebooks and Apple devices. For instance, a 256GB iPhone 14 Pro Max costs users S$79.90 a month for a period of 24 months, according to its website.
Circular has seen its revenue and subscription numbers grow by 10 times in the last year, said co-founder and chief executive Nick Ramsay.
Founded in Singapore in 2021 and backed by American tech start-up accelerator Y Combinator, Circular offers six-, 12-, 18- or 24-month subscriptions tied to phones, tablets, laptops and other accessories such as monitor screens and AirPods.
The firm’s business-to-business arm, Circular for Business, has also seen an 80% increase in demand in the first quarter of 2023, compared with the end of 2022.
“We are seeing very strong demand here, and what is especially exciting is that many of our customers come back for second, or even third, devices once they realise how easy and convenient it is. An interesting way to think about this is that before Netflix, we used to buy DVDs, and before Spotify, we used to download MP3s,” said Ramsay.
“We’re helping our customers make a similar lifestyle change with their tech devices.”
The re-commerce business is catching the eye of investors, too. In a report in March by TechCrunch, consumer electronics reseller Reebelo raised an additional US$29mil (S$39mil), bringing its total Series A fund-raising round to US$50mil.
Reebelo, a Singapore-based marketplace for affordable and sustainable consumer electronics such as pre-owned devices, boasts over 200,000 customers and saw global sales triple in the last year.
But a subscription or re-commerce business model often involves a very high capital outlay, such as to buy the devices initially, said David Yin, a partner at global investment firm GSR Ventures. Hence, scaling the business may prove challenging.
Also, while a device may be restored to factory-reset mode, some consumers may have privacy concerns, preferring to own the device or turn to buy-now-pay-later schemes to get more expensive devices.
In less-developed countries, there could also be a problem of fraud where people do not return the devices, Yin added.
“But for certain consumers, such as those who want a device temporarily, or start-ups that are growing a team quickly, this would be a good solution for them,” he noted.
Professor Boh Wai Fong, deputy dean of Nanyang Business School, said subscription places more emphasis on access to the product rather than ownership, with such business models focusing on providing solutions rather than just goods.
Such a product-as-a-service model enables circularity design, where products can be refurbished or reused at the end of their life cycle. More attention will also be paid to maintenance to increase their longevity.
As consumers no longer own the product, organisations could also prove to be better equipped to handle the end of life of the item, such as by reusing or recycling certain parts, or in some instances, even designing products to last longer in the first place, Prof Boh said.
It can also accelerate the push towards sustainability by shifting from the “use and throw” mentality to one where resources are reused for as long as possible, she added.
But this will depend on how devices are discarded, as wear and tear is likely to be higher for a leased device, and if not handled appropriately, it could make the e-waste situation worse, Associate Professor Walter Theseira from the Singapore University of Social Sciences pointed out.
According to the Ministry of Sustainability and the Environment’s Towards Zero Waste website, Singapore generates about 60,000 tonnes of e-waste a year, which is equivalent to each person discarding about 70 mobile phones.
While e-waste contains valuable and scarce materials such as silver and gold, there are small amounts of harmful substances such as cadmium and lead. Incinerating e-waste also results in carbon emissions.
Circular is looking to recycle all its devices once they have reached their end of life and is looking for partners to do so.
But whether a subscription model will help a consumer save money ultimately depends on his or her lifestyle habits.
Subscription can end up costing more in the long run compared with product ownership if the consumer keeps the device for longer, but the expense may be similar or cheaper for those who very frequently replace their devices, Prof Theseira noted.
“Nonetheless, they do offer a lower cost of entry so they would help with cash-flow management. But the total cost of use is likely to be higher. The most cost-effective way is to hold a device for long enough to spread the depreciation over a longer period of use,” he noted.
“However, this obviously means using outdated technology for a longer time. So each person has to decide what his budget and priorities are.”
For 36-year-old technical producer Brian Seah, switching over to Circular’s subscription plan has helped him cut the amount of ewaste and avoid having to sell old devices.
He discovered Circular over a year ago and started with an iPhone 13. He upgraded to an iPhone 14 Pro Max a few months ago and added an iPad Mini and Macbook Air.
He is paying S$99 a month for his 512GB iPhone, under a 12-month subscription. The retail price of the phone is about S$2,300. – The Straits Times (Singapore)/Asia News Network
