Private Sales Clubs: A 21st Century Distribution Channel

- Analysis of private sales clubs (PSC) as an exclusively online distribution channel
- Consumers exchange deep discounts for lengthy waits in acquiring product.
- PSC response function asymmetries identified with quantile regression.
- Extent of asymmetries wider for customer satisfaction than for intentional loyalty
- OLS estimation of customer satisfaction is extremely misleading for managers.

Private sales clubs are a novel service institution arising out of the Internet's ability to allow an exclusively online channel to distribute out of season or out of fashion inventories to a large set of customers. They have become a thriving industry in the 21st century. In this paper we enhance understanding of this technology mediated institution as a distribution channel. Furthermore, we show how to measure the impact of the distribution services it provides through the Internet on customer satisfaction and of the latter on economic performance. We rely on the technique of quantile regressions in this endeavor. The latter allows for asymmetries in the response function that have been noted as a major issue to be addressed in the analysis of both customer satisfaction and economic performance variables. Our most important empirical finding is that the distortions introduced by ignoring asymmetries in the response function with respect to customer satisfaction are extremely misleading for managers of private sales clubs.