"If I can use it without owning it, why buy it? ”.

If I can use it without owning it, why buy it”.

This mindset is something that is going to shape the future of all buying decisions henceforth, and mind you, not just for Gen Z/Millenials.

The pandemic has eroded buying power of a vast majority (job losses/pay cuts).

So, we are facing a cash-strapped consumer and this thinking WILL spread beyond the Gen Z/Millenials

Isn’t it time for producers of physical products to embrace the ‘Pay for what you Use’ model? 

That translates into questions like:

- Why buy furniture if I can rent it?

- Why buy a car tyre, if I can lease one? 

Controversial? 

Read on….

The ‘Pay as you Use’ model in practice. 

E.g. A partial upfront payment for a car tyre and the rest of it ‘As you Use it.

Today’s car is more like a computer on wheels with all kinds of sensors monitoring various performance and usage patterns. If I am driving my car, the tyre manufacturer would know how many kilometers on what kind of terrain I am driving. If I am driving on an expressway, I would be charged, say, Rs. 0.5 per kilometer. If I am driving on a rough country road, I would be charged, say, Rs. 0.65 per kilometer. The latter being higher because I would be subjecting the tyre to a greater wear and tear. With such data available, the manufacturer would be able to sell me a tyre at a small down payment, which is a fraction of the entire selling price that I have to shell out today and a recurring cost to be paid to the manufacturer as and how I use the car in future. The collected data would be a great input to the R&D folks at the tyre company. Moreover, the same data would be useful to a car insurance company who would be interested in understand people’s driving habits to rationalise the premium that they charge…… another source of revenue. Think of more……. :)

What would be the impact on financing companies such as Banks & NBFCs:

Their existing lending schemes are geared towards financing purchase of assets. That business will soon die out. They will have to collaborate with producers of the products/assets and work out mutually-beneficial leasing models.

They will have to share the marketing costs of these producers, by becoming a channel partner, if they have to survive in the Pay for what you Use’ Economy.

Your Thoughts? :)