LG Electronics announced on July 11 that its subscription-based business model for premium home appliances is experiencing rapid growth. (Image courtesy of LG Electronics)
SEOUL, Jul. 12 (Korea Bizwire) – LG Electronics announced on July 11 that its subscription-based business model for premium home appliances is experiencing rapid growth, with more than 3 out of 10 customers opting for subscriptions over traditional purchases in June.
The tech giant reported that 36.2% of sales for 20 subscription-eligible products at LG Best Shop stores last month were through subscription plans. This figure excludes water purifiers, which are predominantly subscription-based, as well as recently added subscription products like home ventilation systems and CLOi robots.
LG highlighted a particularly steep increase in air conditioner subscriptions as summer approaches, with the majority of subscribers choosing AI-equipped models.
The company expanded its subscription services to include televisions in October of last year. Home entertainment products, including OLED TVs and StanbyME QNED TVs, have quickly become core offerings in LG’s subscription portfolio, with sales through this model rising rapidly.
LG Electronics’ annual subscription revenue reached 1.13 trillion won last year, achieving “unicorn” status just two years after launching large appliance subscriptions in earnest. The company expects to set a new record for annual subscription revenue by the end of this year, citing even faster growth in the first half of 2024 compared to the same period last year.
The popularity of appliance subscriptions is attributed to several factors. Customers appreciate the regular professional maintenance included with subscriptions and the flexibility to choose subscription durations. The model also aligns with recent consumption trends, allowing consumers to use premium appliances for a fixed monthly fee without the burden of high upfront costs.
Riding the wave of the subscription economy, LG plans to expand its appliance subscription services to overseas markets, aiming to strengthen its global market position.
Lee Sung-jin, head of subscription sales at LG Electronics’ Korea Sales Division, said, “LG Electronics’ subscription service, which allows customers to use various premium appliances with professional management, is changing the market paradigm.”
Ashley Song (ashley@koreabizwire.com)
