The Effects of Subscription-Based Retail Memberships: Changes in Consumer Purchases on Own vs. Competitor Platforms*

Purpose: Subscription-based retail membership services have recently emerged as a core strategy in the e-commerce market, aimed at boosting sales and enhancing customer retention. This study empirically examines how retail membership subscriptions influence consumer purchasing behavior. Specifically, it investigates their effects on spending, purchase frequency, order size, and return frequency across both the subscribed platform and its competitors. Research design, data, and methodology: This study utilized a unique panel data that includes demographics and daily spending information from over 2 million individuals. From this dataset, we randomly selected 1,000 individuals who started their subscription to a major Korean e-commerce platform and 2,000 individuals who had not subscribed to the service. Propensity score matching (PSM) was used to construct comparable groups based on subscription likelihood, resulting in a final matched sample of 998 subscribers and 998 non-subscribers. A difference-in-differences (DiD) model was then applied to estimate the impact of membership on spending and purchase frequency across both the subscribed and competing platforms, as well as on order size and return frequency within the subscribed platform. Results: The results show that membership subscription led to a clear shift in consumer buying behavior. After subscribing, consumers significantly increased their monthly spending on the subscribed platform by approximately 18,108 KRW and their purchase frequency by about 1.417 times per month. In contrast, their monthly spending and purchase frequency on competitor platforms decreased by around 6,529 KRW and 0.123 times, respectively. Furthermore, membership also increased return frequency on the subscribed platform by about 0.801 times per month, suggesting a higher level of engagement. However, its influence on order size was not statistically significant. Conclusions: These results suggest that retail membership subscriptions induce a customer lock-in effect, fostering repeat purchases and reducing churn to competitors. Furthermore, membership subscribers exhibit a significantly higher return frequency, potentially leading to increased logistics and return processing costs for e-commerce firms. This study provides empirical evidence on the dual impact of retail memberships—stimulating sales while also increasing operational costs. Thus, it advances research on retail membership operations and offers strategic guidance for e-commerce firms in balancing revenue growth and cost efficiency.