Two Essays on Product Subscriptions

Abstract

Product subscription, i.e. the business model that customers pay to get periodical delivery of certain products, is trendy in recent years. However, given the rising popularity, researches are still lagging behind. In my dissertation, I explore the effects of subscription products on both other not-for-subscription products and the products that are available for subscriptions in a multi-product context. By collecting data from a grocery retailer which rolls out subscription plans for several of its products, I investigate how subscriptions affect customers’ purchases of different products. I find that subscriptions increase customers’ purchases of the other products, which is partly due to the reminding effects of subscriptions during product subscriptions’ delivery. The availabilities of subscription options also facilitate customers’ purchases and increase the overall sales of the products that are available for subscription. Although the overall effects are positive, they are heterogeneous and retailers should be cautious about some of the possible negative consequences.