From consolidation to fragmentation: How removing shipping thresholds reshapes purchase behaviour

Premium membership programmes such as Amazon Prime and JD Plus aim to deepen customer loyalty by removing shipping frictions. While prior research has documented their positive effects on long-term retention and net revenue, much less is known about how they reshape the micro-level structure of transactions and the associated cost-to-serve. We examine a “purchase fragmentation dilemma,†in which eliminating a free-shipping threshold increases purchase frequency but reduces average order value (AOV), thereby undermining transactional efficiency. Using large-scale transaction data from a leading e-commerce platform, we employ propensity score matching with regression adjustment and a quasi-experimental comparison based on institutional variation as supportive triangulation. Our estimates indicate that membership is associated with higher engagement but a statistically significant 2.5 % reduction in AOV, driven primarily by a downward shift in price mix rather than item count. Model-free evidence from bunching around the shipping cut-off shows that non-members strategically consolidate orders to clear the threshold, whereas members purchase on demand. These results reveal a fundamental trade-off in membership programme design: smaller, more frequent orders can erode efficiency gains from higher engagement, complementing prior revenue-focused findings with a micro-mechanism and operational perspective. We formalize this trade-off with a Membership True Net Value (MTNV) framework and discuss implications for platform strategy, including tiered memberships and consolidation incentives.