The Concept of Appliance Subscriptions: Can it Gain Traction in India?

Recently, a report by Bloomberg highlighted the efforts of LG and Samsung to introduce a subscription-based model for home appliances, similar to the one offered by Netflix. The idea is straightforward: consumers pay a monthly fee to access the latest appliances, such as refrigerators, washing machines, or microwaves, and can upgrade or return them as needed, without being tied to a long-term commitment or incurring significant upfront costs.

In South Korea, LG has already seen significant success with this model, generating nearly ₩2 trillion (approximately ₹12,000 crores) in revenue in 2024, representing a 75% increase from the previous year. However, it is essential to note that subscriptions still account for only 4% of LG's annual revenue in its consumer electronics business, indicating a long road ahead for the company.

LG has already launched its subscription service in several countries, including Malaysia, Taiwan, and India, with plans to expand further in other Asian markets. Samsung has also entered the fray, recognizing the potential of this emerging trend.

The question remains whether this concept can gain traction in India, where consumers are accustomed to subscribing to services like Netflix or JioHotstar. According to LG's Draft Red Herring Prospectus (DRHP) filed in December 2024, the Indian appliance rental and subscription market was valued at ₹8,300 crores in 2023 and is expected to nearly triple to ₹29,000 crores by 2028, growing at a rate of 28% per annum.

Several factors are driving this growth, including changes in urban lifestyles, with young professionals seeking flexible living arrangements and preferring to rent appliances rather than purchase them outright. Additionally, subscriptions offer a more financially viable option, as they eliminate the need for significant upfront costs and provide access to premium appliances without breaking the bank.

The rise of India's middle class and increasing incomes are also contributing to the demand for high-end appliances, making subscriptions an attractive option for those who want to upgrade their lifestyle without incurring substantial expenses.

However, there are challenges that LG and other companies must address to succeed in this market. One of the primary concerns is the logistical complexity of managing a large fleet of appliances, including returns, deliveries, and maintenance. This can be a daunting task, particularly in a vast and diverse country like India.

Moreover, Indian consumers are known to be value-conscious and may be hesitant to commit to subscription services, especially if they do not see a clear benefit or value proposition. The experience of OTT (over-the-top) platforms, where only 20% of users pay for subscriptions, despite a significant increase in penetration, highlights this challenge.

The co-living space market is another factor that could impact the growth of appliance subscriptions. With many youngsters opting for convenient and affordable co-living arrangements that include amenities like meals, electricity, and housekeeping, the need for individual appliance subscriptions may be reduced.

To succeed in this market, LG and other companies must focus on streamlining logistics, enhancing the customer experience, and making subscriptions genuinely hassle-free. With its strong market presence and potential IPO, LG has the resources to invest in this emerging trend and carve out a niche in India's metro cities.

Ultimately, the success of appliance subscriptions in India will depend on how well companies can address the challenges and complexities associated with this model. While it is an intriguing concept, it remains to be seen whether it can gain widespread acceptance and become a viable business model in the Indian market.