Retail Observer

RETAILOBSERVER.COM MARCH 2017 48 F or many consumers, buying a new home appliance is not unlike buying a car. They can be expensive and, after a few years, you often wish you could upgrade to a newer model. However, unlike transportation, the modern marketplace for appliances hasn't really adjusted to the needs of consumers. Sure, you can buy used dishwashers or refrigerators on Craigslist, but the reality is the aftermarket for appliances has been around for decades. But the good news is change might be just around the corner. Some appliance makers are considering adapting new and interesting business models adapted from the worlds of transportation, travel and other business where expensive assets hinder access by consumers. I take a look at a some emerging business models for the appliance business below. APPLIANCE-AS-A-SERVICE Over the past decade, the subscription model has changed the way we buy everything from music to software to food. And now, the disruptive business model that's given rise to companies such as Salesforce and Blue Apron may be coming to the world of appliances. By leveraging IoT and smart home technology, a connected appliance-as-a-service model could soon transform the way consumers buy home appliances from primarily a transactional model to a service based one. So what is appliance-as-a-service? It started in enterprise software, where products have moved from one-time purchases to what is essentially a monthly rental model. This X as a Service model is also gaining traction in consumer markets, whether it's cars, furniture or clothing. And now it's no surprise that a business with significant up front cost for consumers like appliances would be ripe for a service- based model. Not only does the consumer get an appliance without paying a bunch of cash up front, but they also get the peace of mind that the device will be maintained and even upgraded from time to time to ensure access to the latest and greatest features. There are also benefits for the appliance manufacturer in a service model. One is financial, as it becomes pretty clear pretty quickly that building a large installed base of subscribers vs relying on one-time sales will create a more stable, predictable and, one hopes, larger overall revenue stream over time. And, much like car makers, the appliance manufacturer could conceivably sell the used appliance down the road to value-seeking consumers. PRODUCT MAKERS ARE NOW CONTENT COMPANIES Gone are the days when you can sell your kitchen appliance with a black and white, poorly designed instruction manual. Companies like ChefSteps, Anova, and Whirlpool are creating compelling content-rich app experiences that not only show the consumer how to use their products, but immerse them in rich content to answer questions, make them better cooks and build a community. Deep video libraries, interactive recipes and access to social network-powered communities give these devices new life and create deeper brand loyalty. A NEW WORLD The bottom line is while IoT-powered devices enable many significant consumer-pleasing features, the bigger opportunity for appliance makers is radically transforming the way the do business. Companies hardened in their traditional way of doing business should understand that new entrants will come into the market through embracing new and innovative business models (the home security market is an example of such a disruption). By adapting to new business models that change purchase paradigms can and will lengthen the relationship with the customer, bring a greater return on investment, and help avoid being disrupted. MIchael Wolf Smart Kitchen Trends EMERGING TECHNOLOGY-POWERED BUSINESS MODELS Reinventing the appliance business Michael Wolf is the publisher of The Spoon, a site focused on the future of the kitchen and cooking, and creator of the Smart Kitchen Summit, the leading event focused on the future of food, cooking and the kitchen. RO

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