The market for appliance subscription services, which has been mainly focused on small and medium-sized enterprises, is expanding as large corporations enter the market. LG Electronics and Samsung Electronics are gaining attention as they enter the appliance subscription market, expanding the range of subscription items from small to large appliances.
According to industry sources, LG Electronics initially entered the market in 2009 with a water purifier rental business and now offers a total of 23 products, including large appliances such as washing machines and refrigerators, as well as premium devices such as TVs and laptops, in a subscription service format. Recent additions include a robot for corporate customers as a subscription product, expanding customer outreach.
Unlike traditional rental installment services that simply divide the product price, subscription services involve paying a monthly fee to receive service management and regular replacement of consumables. The profit margin for appliance business sales is usually around 3-5%, while subscription services are known to exceed 10% in profit margin.
LG Electronics reported revenue of 1.1341 trillion won from appliance subscription services last year, exceeding 1 trillion won for the first time. The share of appliance subscription services in overall appliance sales is around 20%, with a double-digit profit margin being maintained.
With the growing popularity of essential appliances among young people, the market is expected to reach 100 trillion won by 2025. As LG Electronics achieves better-than-expected results in appliance subscription services, attention is now turning to Samsung Electronics, which competes fiercely in the domestic appliance market.
Samsung Electronics has not yet made a firm decision on entering the appliance subscription business. However, industry experts believe it is only a matter of time before Samsung Electronics enters the subscription service market, given the increasing demand for appliance subscription services among young consumers shifting from ownership to experience-based consumption patterns.
The expanding rental market in Korea, transitioning to subscription services, is expected to grow from 40 trillion won in 2020 to 100 trillion won by 2025.