Who Is This Research For? Retail and e-commerce leaders, subscription program managers, and digital commerce strategists evaluating the long-term impact and profitability of subscription-based free shipping models.
Executive Summary
This research from Ashutosh Bhave at the Sam M. Walton College of Business, University of Arkansas (Department of Marketing)
explores how subscription-based free shipping programs affect customer behavior and
retailer profitability over time.
Using customer data from a UK apparel retailer, the study examines how customers behave
when they first subscribe to a low-cost “free shipping” membership—and what happens
when they renew or cancel. The findings reveal that while subscriptions drive higher
spending and more frequent orders in the early months, those gains fade quickly. Members
tend to make smaller, more frequent purchases, often of low-priced items, which can
reduce margins.
In the second year, subscribers remain active but generate smaller returns than in
the first year. Once customers cancel their memberships, their spending and engagement
drop below that of nonmembers—suggesting that low-fee shipping programs may not build
lasting loyalty on their own. The research highlights the need for retailers to rethink
how they sustain engagement and profitability beyond the initial excitement of “free
shipping.”
Action Items for Industry
- Bundle more than shipping: Add exclusive discounts, early access, or limited-time offers to sustain engagement beyond the first few months.
- Set smart thresholds: Establish minimum order sizes or tiered shipping benefits to manage costs and maintain profitability.
- Encourage purchase consolidation: Offer small incentives that prompt customers to combine several low-value items into fewer, larger orders.
- Watch for engagement drop-offs: Track customer activity month by month and re-engage with personalized renewal or loyalty incentives before churn sets in.
- Plan for post-cancellation recovery: Recognize that spending often dips after cancellation and develop win-back offers to re-attract former subscribers.
Quote from the Researcher
"Retailers—especially those offering free shipping for a small subscription fee—should be cautious. Free shipping may attract customers, but it doesn’t guarantee loyalty. To sustain long-term engagement and profitability, retailers must go beyond the perk, pairing it with exclusive benefits, personalized offers, and tiered rewards that keep shoppers coming back long after the initial excitement fades"
-Ashutosh Bhave
Co-Authors & Affiliations
- Norris I. Bruce — University of North Carolina, Kenan-Flagler Business School.
- Larry Olanrewaju Orimoloye — University of Southampton, Business School.
Link to the Original Research
Published in Journal of Retailing, available here.
📩 Interested in learning more?
If you’d like additional information about this research or to connect directly with
the researchers, please email us at research@walton.uark.edu.
