march, 2025
11mar18:3020:00MaR Seminar/Webinar - Rui Soucasaux Sousa
Event Details
CEF.UP – MaR Seminar/Webinar Tuesday – March 11th, 2025 | 18:30h - 20:00h | Room 631 | Online "Home-delivery subscription services and their impact on omnichannel grocery retailing revenue and operating costs"
more
Event Details
CEF.UP – MaR Seminar/Webinar
Tuesday – March 11th, 2025 | 18:30h – 20:00h | Room 631 | Online
“Home-delivery subscription services and their impact on omnichannel grocery retailing revenue and operating costs”
Rui Soucasaux Sousa – Católica Porto Business School, Catholic University of Portugal
We examine transaction-level data from an omnichannel grocery retailer to study the impact of home-delivery subscription service on retail revenue and operating costs across online (home-delivery and click-and-collect) and offline channels. We further quantify the consumer heterogeneity of these effects to identify determinants of subscription profitability and derive a minimum order value that guarantees this profitability. We find that consumers decrease their weekly spending on home-delivery fees by 6.70% post-subscription. However, they also increase their average total weekly spending on groceries by 30% (combining all channels). This is driven primarily by increases in product spending through the home-delivery channel at the expense of other channels. We identify changes in order frequency and the value and number of SKUs and total items per order as the mechanisms behind this cannibalization. These mechanisms also increase the retailer’s order picking and delivery costs, resulting in an average 3% residual gross margin. Nevertheless, our analysis of individual consumers reveals that for many of them, these increases in costs exceed the revenue gains obtained by the retailer post-subscription. To correct for these imbalances, we contribute a procedure to identify a minimum order value required for home deliveries in the subscription program. Overall, our results show that the economic impact of delivery subscription programs is rooted in behavioural drivers leading consumers to increase their consumption and offset the sunk costs they incur from the upfront fees they pay when joining these programs. This impact is also reflected in consumers’ behavioural changes to reduce the costs of transacting with the retailer post-subscription.
Time
(Tuesday) 18:30 - 20:00