GSBE Seminar Barış Kocaman (Vrije Universiteit Amsterdam)

Sellers in business markets increasingly offer shipping subscription programs, in which customers get year-round free shipping for a fixed upfront fee, a service innovation aimed at creating superior customer value. Though shipping subscriptions have been shown to increase sales for (online) B2C retailers, the B2B setting is much more complex, owing to the critical salesperson channel. We study the demand implications (i.e., purchase value, frequency, and basket size) across multiple channels (i.e., salesperson, online, and store) of a shipping subscription program at a B2B high-tech tools manufacturer. To account for the customer’s self-selection into the program, we apply a synthetic control approach. The results demonstrate that while subscription has a null effect on purchase value across channels, it prompts channel substitution from the online to the salesperson channel. This substitution might be beneficial for the seller if the additional salesperson interactions contribute to building long-term relationships rather than merely focusing on transactions. Yet our follow up analyses uncover that the channel substitution is driven by the salesperson’s transactional role, as evidenced by deeper discounts for subscribers in the salesperson channel. Our results thus shed light on the potential negative effects of a subscription program as it steers transaction-focused interactions between salespeople and subscribers, which are known to be detrimental to long-term relationships. Keywords: channels, shipping subscription, omnichannel, B2B, channel substitution