A retail subscription model adds recurring revenue to a store through paid loyalty (a fee for free delivery and member prices), replenishment subscriptions for products customers reorder, or curated boxes. Kogan's paid memberships earned A$61.4 million in fiscal 2026. Price the fee so it covers delivery and discounts, keep the headline benefit simple, and measure incremental spend, not just member spend.
Key takeaways
- Kogan's loyalty subscriptions earned A$61.4 million in fiscal 2026, up 14.3%, with A$11.3 million of fees paid in advance.
- Paid loyalty, replenishment and boxes are the three retail models. Most stores should start with one.
- Members who join usually already spend more. Measure the change in spend for the same customers, or you'll fool yourself.
- Cap 'unlimited' offers on anything customers can overuse. Panera capped its drinks club at 30 a month in August 2026.
- Amazon paid a $2.5 billion FTC settlement over Prime sign-ups and cancellation. Easy exits are now the price of entry.
Ruslan Kogan built kogan.com as a low-price online retailer. Low prices mean thin margins. Thin margins mean you need customers to come back, again and again.
So he bolted on a paid membership.
Kogan FIRST gives members free shipping and member prices. Kogan now runs two paid programs, Kogan FIRST in Australia and Mighty Ape PRIMATE in New Zealand, and in fiscal 2026 they earned A$61.4 million, up 14.3%. At 30 June 2026, A$11.3 million of membership fees had been paid in advance. Those loyalty fees equal about 5.9% of the group's A$1.04 billion in gross sales, and they're mostly high-margin fee income.
Read that again. A low-margin retailer built a high-margin, cash-upfront profit stream by charging people for the right to shop with it more.
In the book I describe the problem Kogan solved. Traditional e-commerce, and traditional retail, makes money only when you sell a product. Once it's sold, there's no guarantee the customer will return. With plain retail, you don't get recurring revenue.
That's why you build subscription pricing in. The Kogan First case study shows how far it can go.
Which subscription models fit a retail store?
Of the book's eight subscription models, three do most of the work in retail.
| Model | How it looks in a store | Best for |
|---|---|---|
| Member Benefits (paid loyalty) | An annual or monthly fee for free delivery, member prices and early access | Stores with repeat shoppers and delivery costs |
| Consumables (subscribe and save) | Automatic reorders of products customers run out of | Coffee, pet food, skincare, supplements, filters |
| Subscription Boxes | A curated monthly box for a niche | Specialty stores with expert curation |
| Unlimited (capped) | "A coffee a day" or "a book a month" | Cafes and bookshops inside retail |
In the book I used LARQ as the consumables example: buy the self-cleaning pitcher upfront, then get replacement filters every two months on subscription. That's the easiest retail subscription there is, a product you sell once plus the part that wears out. The consumables model page covers it.
The member benefits model is what Kogan and Amazon run. And curated boxes work when your staff's taste is the product, such as wine, books, tea or plants.
What can retailers learn from Starbucks, Panera and Amazon?
Starbucks shows you don't always need a fee. Starbucks Rewards hit 35.5 million members active in the previous 90 days in Q1 of fiscal 2026. In March 2026 it relaunched with Green, Gold and Reserve levels. Green members' Stars expire after six months unless they do a qualifying activity each month. Gold members' Stars never expire. That "keep it alive" mechanic creates a monthly habit without charging anything.
Panera shows why "unlimited" needs a limit. Its Unlimited Sip Club always carried fine print. From 19 August 2026 Panera capped it at 30 drink redemptions a month, dropped the word "Unlimited" and set the monthly price at US$14.99, while keeping the annual plan at US$119.99. Anything a customer can overuse needs a cap.
Amazon shows the cost of a hard exit. On 25 September 2025 the FTC announced a US$2.5 billion settlement over allegations that Amazon enrolled consumers in Prime without consent and made canceling deliberately hard. The Amazon Prime case study explains what changed.
What does a 3-tier retail membership look like?
Here's an illustrative offer for an Australian specialty retailer with a physical store and online sales, such as a homewares, pet, garden or gourmet food store. Prices include GST.
| Insider | Club | Club + Box | |
|---|---|---|---|
| Price (illustrative) | Free | A$99 a year, or A$9.99 a month | A$49 a month |
| Delivery | Standard rates | Free local delivery on orders over A$40 | Free local delivery on all orders |
| Member prices | Points on every purchase | 10% off everyday prices | 10% off everyday prices |
| Early access | Sale emails | 48-hour early access to sales | Early access plus members' night |
| Box | None | None | A curated monthly box worth A$60 at retail |
| Commitment | None | Annual or monthly | Monthly, with skip or pause any month |
The free tier builds the list. The paid Club tier is where the economics happen. The box tier is optional, and only worth it if curation is genuinely your strength.
See what a membership does to your margins
Use the free Subscription vs One-off Profit Calculator to model membership fees, member discounts and extra spend against your current sales.
How do you know if a retail membership is profitable?
Here's the trap most retailers fall into. Members spend more than non-members, so the membership "works."
But the people who join a paid membership are usually your best customers already. You need to know how much more they spend because they joined.
Worked example: is the Club tier worth it?
Before joining: a regular customer spends A$700 a year (A$636.36 excluding GST). At a 40% gross margin, you keep A$254.55.
After joining the Club: they buy A$1,200 a year of goods at everyday prices (A$1,090.91 excluding GST), before their member discount. - Gross margin at 40% before the member discount: A$436.36 - Less the 10% member discount: A$109.09 - Less six free deliveries at A$9 each: A$54.00 - Plus the membership fee, excluding GST: A$90.00
You keep A$363.27, about A$108.72 more than before.
But if they only buy A$800 after joining, you keep about A$254.18 (A$290.91 of margin, less A$72.73 discount and A$54 delivery, plus A$90). That's slightly less than before. The membership has cost you money.
Membership gain = (Member margin after discount − delivery cost + fee) − margin the same customer earned before joining
The membership pays when it changes behavior. It costs money when it just discounts what loyal customers were going to buy anyway.
Run your own scenarios in the Subscription vs One-off Profit Calculator, check the fee with the Subscription Price Calculator.
Subscription vs One-off Profit CalculatorSee how switching to subscription changes revenue, cash flow and valuation.Open the free tool →How do you launch a retail subscription?
- Pick one model. Paid loyalty if delivery is a big cost or a big objection. Subscribe and save if you sell refills. A box only if curation is your edge.
- Know the cost of every benefit: delivery, discounts, packaging, staff time.
- Keep the headline benefit simple. "Free delivery and 10% off, all year" fits on a shelf talker.
- Test with a group. Offer it to 200 customers, then compare their spend in the six months after joining with the six months before.
- Sell it at the counter and checkout. "You'd have saved A$14 today as a member" is the most persuasive line in retail.
- Make leaving easy. Online cancellation, pause and skip. It's good practice now and the law in Australia from July 2027.
- Report membership revenue separately, as Kogan does, so you can see whether it's your most profitable line.
What are the pitfalls?
Discounting your best customers for nothing. The worked example shows how easily the maths flips.
Benefit creep. Free delivery, then free returns, then birthday gifts, then member events. Each one is small. Together they eat the margin.
"Unlimited" on overusable items. Pret and Panera both learned this with drinks.
Relying on forgetfulness. Paid memberships that profit from people who forgot they signed up are exactly what regulators are targeting.
Subscription fatigue. Customers are choosier about what they subscribe to. If they can't name the benefit they use, they'll cancel at renewal.
What do Australian retailers need to know?
As at October 2026, this is the short version. It's general information, so get advice on your own terms.
The subscription rules from 1 July 2027. Paid memberships, subscribe-and-save programs and boxes that renew automatically are subscription contracts under the Unfair Trading Practices Act 2026. You'll need to state upfront that it's a subscription and how much it costs, send the reminders the regulations will prescribe (expected to include before renewals and before trials end; check the final regulations), and make canceling easy, online if customers can join online. The subscription trap laws guide and the renewal reminder templates will help.
Pricing displays. Consumer prices must show the total price including GST, and the new law also requires transaction-based fees to be shown with the base price.
Annual fees are paid in advance. Kogan reports its prepaid fees as deferred income. You should track annual membership fees the same way and recognize them over the year.
The accountant's angle: cash upfront and a better business
A paid membership does three things to a retailer's numbers.
It brings cash forward. Annual fees arrive before the purchases they support, which helps fund stock.
It adds a high-margin revenue line that isn't tied to the margin on any product.
And it makes the business more valuable, because a buyer can see a base of members, their renewal rate and their spend, rather than a list of past transactions. The subscription cash flow guide explains how to read those numbers.
Free Subscription Profit Review
Australian business owners can book a free 30-minute review with a BPAG Accountants adviser. An honest conversation about:
- whether a subscription model could work for your business
- how recurring revenue could cover your fixed costs each month
- how it could lift what your business is worth
No cost, no obligation. General information only until we understand your situation.
What to do next
Pull your sales data and find the customers who bought from you at least four times last year. Calculate what a 10% discount and free delivery would have cost you on their purchases.
If the membership fee covers that cost and you believe it will lift their spend, test it with 200 of them. If you sell mostly online, the e-commerce subscription playbook goes deeper. For more industries, see all industry playbooks.
Frequently asked questions
Should a retail membership be free or paid?
Both work, for different jobs. A free tiered program, like Starbucks Rewards, builds frequency and data at low cost. A paid membership, like Kogan FIRST or Amazon Prime, brings cash upfront and makes members feel they should use what they paid for. Many retailers run both: free loyalty for everyone, and a paid tier for their best customers.
What benefits work best in a paid retail membership?
The simplest ones: free delivery, member-only prices and early access to sales. They're easy to explain and easy to measure. Kogan makes free shipping and member prices the headline. Avoid long lists of small perks. Customers can't remember them, and each one adds cost you can't see.
How much should a retail membership cost?
Work back from what the benefits cost you. If free delivery costs you A$9 a delivery and a member orders six times a year, that's A$54 of cost before any discount. When I wrote the book, Club Catch cost A$69 a year. For a specialty independent store, an annual fee of about A$79 to A$129 is an illustrative range.
Can a small store run a subscribe-and-save program?
Yes, if you sell things customers reorder: coffee beans, pet food, skincare, supplements, cleaning products, filters. Offer a small discount, typically 5% to 10%, for automatic repeat orders, let customers change the frequency or skip online, and remind them before each order. Most e-commerce platforms have subscription apps that handle the billing.
What's the biggest risk with retail subscriptions?
Giving margin away to customers who would have bought anyway. If your best customers join, get 10% off and free delivery, and keep buying exactly what they always did, the membership costs you money. Test it on a group of customers, compare their spend before and after joining, and only then roll it out widely.
General information only, current as at October 2026. It isn't legal, tax or financial advice and doesn't consider your circumstances. Speak to a qualified adviser before acting.
Talk it through with a BPAG adviser
Free for Australian business owners: a 30-minute Subscription Profit Review on whether a subscription suits your business.
Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- Kogan.com: FY26 results announcement (24 Aug 2026)
- FTC: FTC secures historic $2.5 billion settlement against Amazon (25 Sep 2025)
- Starbucks: Reimagined Starbucks Rewards loyalty program launches (10 Mar 2026)
- Restaurant Dive: Panera adds limits to Sip Club beverage subscription (14 Jul 2026)
- The Subscription Playbook (Robert Coorey, 2022), Chapter 3: Catch, Club Catch and LARQ
- Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 (No. 64, 2026)
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.