Expanding Markets or Capturing Share? The Effects of Subscription on Spending and Share-of-Wallet in Restaurant Delivery
Subscription services are growing in popularity, yet their competitive implications are relatively understudied. This paper investigates the effects of restaurant delivery subscription programs on consumer spending within and across categories, and how these effects vary based on prior spending at competing firms. Using individual-level transaction data over 29 months and a staggered difference-in-differences design across multiple subscription cohorts, we find that signing up for Postmates Unlimited, the first subscription program in the category, is associated with an 85% increase in focal firm spending in our matched sample, with a declining effect over time that nonetheless persists even after customers cancel their subscriptions. This increase is driven by both category expansion and higher share-of-wallet for the focal firm, while spending in adjacent categories is unaffected. Multihomers (customers of both focal and competing firms before signing up) show a 103% increase in focal firm spending compared to a 52% increase for singlehomers (customers of the focal firm alone before signing up). Interestingly, singlehomers increase their spending at competing firms after signing up, whereas multihomers decrease theirs. We replicate our analysis on DoorDash’s DashPass, the second subscription program to enter the category, finding similar results to Postmates; however, DashPass subscribers with prior Postmates subscription experience do not exhibit category expansion, instead amplifying competitive displacement.
Daniel McCarthy
Daniel McCarthy is an Associate Professor of Marketing at the University of Maryland's Robert H. Smith School of Business. I popularized customer-based corporate valuation, a "bottom-up" approach to valuing firms by assessing the value of their customers. My other areas of research include data fusion, data privacy, missing data problems, machine learning, and causal inference. My research has been accepted and published in top-tier academic journals such as the Journal of Marketing Research, Marketing Science, Journal of Marketing, Journal of the American Statistical Association: Theory and Methods, and Annals of Applied Statistics. My work has also been featured in media outlets such as the Harvard Business Review, Wall Street Journal, FT, Fortune, The Economist, Inc, USA Today, Barron's, CBS, CNBC, Slate, Business Insider, and CFO Magazine. I have won numerous awards, including the Don Lehmann Award, Robert J. Lavidge Award, MSI Alden G. Clayton Award, ISMS Award, Shankar-Spiegel Award, and Gary Lilien ISMS-MSI-EMAC Practice Prize. I was also a finalist for many others, including the Paul Green, John A. Howard/AMA, JM Hunt/Maynard, and MSI H. Paul Root Awards.