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Tech packages use the oldest form of upselling for growth: French fries
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Tech packages use the oldest form of upselling for growth: French fries

This is the conclusion of today’s Morning Brief, which you Sign up to receive it in your inbox every morning, along with:

A flood of technology packages has brought consumers back to a basic American question: “Would you like fries with that?”

Walmart (WMT) is embracing the industry-wide success of its competitor Amazon Prime (AMZN) by now offering members of its loyalty program discounted meals at Burger King. In Walmart’s case, the retail giant is literally nudging its customers with more tasty calories.

To boost its own subscription revenue, Verizon (VZ) is now offering 12 months of Netflix’s (NFLX) premium plan for free to customers who purchase a year of the National Football League’s streaming service.

Bundling is an advanced form of upselling in the app age that wraps itself in value. We unbundled cable, only to rebundle it. Now we subscribe to cheeseburgers.

But what initially seems like a downplayed sales pitch by companies (and their executives) simply trying to tout new offerings turns into real hostility when it comes to raising prices under a different name.

TURIN, ITALY – JULY 13: General view of a close-up of French fries by Burger King on July 13, 2023 in Turin, Italy. In observance of World French Fries Day which is celebrated annually on July 13. (Photo by Stefano Guidi/Getty Images)TURIN, ITALY – JULY 13: General view of a close-up of French fries by Burger King on July 13, 2023 in Turin, Italy. In observance of World French Fries Day which is celebrated annually on July 13. (Photo by Stefano Guidi/Getty Images)

General view of Burger King’s French fries on July 13, 2023 in Turin, Italy. (Stefano Guidi/Getty Images) (Stefano Guidi via Getty Images)

A recent example is the $1,700 Snoo Smart Sleeper, whose maker recently introduced a premium subscription model to offer additional smart carrycot features to parents who have recently developed sleep problems. In recent years, luxury car makers have tried charging for features like heated seats, but then backtracked on those plans.

Ultimately, companies are looking for their own version of a “real package,” with an offer that includes practically free shipping on almost everything or unlimited access to almost every song ever recorded. And are the improbable logistics of realizing you need paper towels and then having someone leave them on your doorstep in the middle of the night even replicable? Probably not.

But consolidation may be an efficient way to provide added value to customers and make a lot of money – just ask for the cable package.

The planned sports streaming company Venu – backed by Disney’s ESPN (DIS), Warner Bros. Discovery (WBD) and Fox (FOXA) – was touted as the ultimate package in a confusing media landscape. But a judge put the launch on hold as part of an antitrust lawsuit filed by FuboTV (FUBO).

In fact, the value there may have been too good. At least for the moment.

And as we’ve discussed in this newsletter, sometimes a subscription just makes more sense for a company. This is the case for struggling exercise bike maker Peloton (PTON), which was brought down by the cost of its bikes, not the monthly fee.

The idea of ​​one-stop shopping, or something similar, has its advantages. Buying a small pile of Goldfish crackers and then a hot dog for $1.50 at Costco (COST) sounds like a good deal. Long-term shareholders of the warehouse operator would agree. But how many versions of this offer can the market absorb?

Too often, recurring add-ons and tit-for-tat pricing schemes feel like a hostage situation. And in the worst cases, companies try to get their customers to recurring revenue by any means possible, hoping that they’ll stay because they forgot to leave.

Hamza Shaban is a reporter for Yahoo Finance covering markets and economics. Follow Hamza on X @hshaban.

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