infonet-economy

Product subscription models have grown in popularity among retailers and consumers. We show that risk perception plays a central role in consumers’ evaluation of product subscriptions. Contrasting with predefined subscriptions, where contents are known to consumers prior to delivery, surprise subscriptions, where contents are unknown to consumers prior to delivery, carry an inherent risk for consumers to receive unwanted products. Surprise-related research, however, has not yet touched upon surprise as a retailing mechanism. Based on Prospect Theory, we delineate that consumers prefer predefined subscriptions in shorter and surprise subscriptions in longer delivery intervals. The degree of perceived risk thus caps the frequency in which consumers prefer recurring subscription deliveries. We show how retailers can manipulate associated risk through the introduction of a free-return option in order to increase consumers’ propensity to select surprise subscriptions in higher frequencies.