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Subscription programs in omnichannel grocery retailing: implications for revenue and fulfilment operations
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This paper investigates the implications for revenue and fulfillment operations of the introduction of online subscription programs to pay for home delivery in omnichannel grocery retailing. Based on data on consumer-level transactions in a retailer before and after the introduction of a subscription program, we find that subscribers increase their online product spending after joining the program. However, the online product sales contribution is offset by changes in consumers’ behaviors intended to extract economic benefits from joining the program, with negative impacts on fulfillment operations. We discuss the implications of these findings for the design of subscription programs and fulfillment operations.
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Retail operations Omnichannel Fulfillment