IDEAS home Printed from https://ideas.repec.org/a/eee/joreco/v48y2019icp105-112.html
   My bibliography  Save this article

The effect of threshold free shipping policies on online shoppers' willingness to pay for shipping

Author

Listed:
  • Huang, Wen-Hsien
  • Shen, George C.
  • Liang, Che-Ling

Abstract

More and more online retailers now offer free delivery for orders exceeding a minimum purchase quantity—in effect, a threshold free shipping (TFS) policy. While TFS has become so prevalent in e-tailing, there is still not much known about the factors that may influence the consumers’ intentions to pay for delivery when they purchase less than the specified quantity. Based on the dual entitlement principle, we develop a conceptual model to examine the possible influence on consumer perceptions of the characteristics of the TFS policy (i.e., threshold level, shipping charge, and delivery timing) and how this may influence their inferred retailer's motive and value perceptions, which in turn impacts their perceptions of the fairness of the policy and willingness to pay for shipping when the threshold for free shipping is out of reach. A total of 367 online responses were collected. The results reveal that consumers’ inferred motive for the retailer's TFS policy is positively influenced by their perceptions of the threshold and shipping fees as a profit generator, but negatively influenced by the delivery timeliness. As hypothesized, both perceived threshold and delivery timeliness contribute to the consumers’ value perceptions. In addition, perceived policy fairness is affected by the perceptions of shipping fees as a profit generator and perceived value. Finally, the consumer's willingness to pay for shipping is mainly affected by the inferred motive rather than the perceived value and policy fairness perceptions.

Suggested Citation

  • Huang, Wen-Hsien & Shen, George C. & Liang, Che-Ling, 2019. "The effect of threshold free shipping policies on online shoppers' willingness to pay for shipping," Journal of Retailing and Consumer Services, Elsevier, vol. 48(C), pages 105-112.
    • Handle: RePEc:eee:joreco:v:48:y:2019:i:c:p:105-112
    DOI: 10.1016/j.jretconser.2019.01.015
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969698918305757
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretconser.2019.01.015?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Huang, Wen-Hsien & Cheng, Yi-Ching, 2015. "Threshold free shipping policies for internet shoppers," Transportation Research Part A: Policy and Practice, Elsevier, vol. 82(C), pages 193-203.
    2. Vogel, Julia & Paul, Michael, 2015. "One firm, one product, two prices: Channel-based price differentiation and customer retention," Journal of Retailing and Consumer Services, Elsevier, vol. 27(C), pages 126-139.
    3. Pei, Zhi & Paswan, Audhesh & Yan, Ruiliang, 2014. "E-tailer׳s return policy, consumer׳s perception of return policy fairness and purchase intention," Journal of Retailing and Consumer Services, Elsevier, vol. 21(3), pages 249-257.
    4. Boone, Tonya & Ganeshan, Ram, 2013. "Exploratory analysis of free shipping policies of online retailers," International Journal of Production Economics, Elsevier, vol. 143(2), pages 627-632.
    5. Nguyen, Bang & Klaus, Philipp “Philâ€, 2013. "Retail fairness: Exploring consumer perceptions of fairness towards retailers’ marketing tactics," Journal of Retailing and Consumer Services, Elsevier, vol. 20(3), pages 311-324.
    6. Folse, Judith Anne Garretson & Niedrich, Ronald W. & Grau, Stacy Landreth, 2010. "Cause-Relating Marketing: The Effects of Purchase Quantity and Firm Donation Amount on Consumer Inferences and Participation Intentions," Journal of Retailing, Elsevier, vol. 86(4), pages 295-309.
    7. Hamideh Bagheri & Meysam Hemmatishabani, 2017. "Investigating the Moderating Role of Enjoyment in the Relationship between Brand Image, Service Quality, and Convenience in Search and Purchase Behaviour in Multichannel Retailing," Asian Social Science, Canadian Center of Science and Education, vol. 13(1), pages 1-53, January.
    8. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
    9. Bougie, J.R.G. & Pieters, R. & Zeelenberg, M., 2003. "Angry customers don't come back, they get back : The experience and behavioral implications of anger and dissatisfaction in services," Other publications TiSEM 1708fb71-fd68-41d9-b870-e, Tilburg University, School of Economics and Management.
    10. Bolton, Lisa E & Warlop, Luk & Alba, Joseph W, 2003. "Consumer Perceptions of Price (Un)Fairness," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 29(4), pages 474-491, March.
    11. Xia, Lan & Kukar-Kinney, Monika & Monroe, Kent B., 2010. "Effects of Consumers’ Efforts on Price and Promotion Fairness Perceptions," Journal of Retailing, Elsevier, vol. 86(1), pages 1-10.
    12. Becerril-Arreola, Rafael & Leng, Mingming & Parlar, Mahmut, 2013. "Online retailers’ promotional pricing, free-shipping threshold, and inventory decisions: A simulation-based analysis," European Journal of Operational Research, Elsevier, vol. 230(2), pages 272-283.
    13. Michael Lewis & Vishal Singh & Scott Fay, 2006. "An Empirical Study of the Impact of Nonlinear Shipping and Handling Fees on Purchase Incidence and Expenditure Decisions," Marketing Science, INFORMS, vol. 25(1), pages 51-64, 01-02.
    14. Xia, Lan & Monroe, Kent B., 2010. "Is a good deal always fair? Examining the concepts of transaction value and price fairness," Journal of Economic Psychology, Elsevier, vol. 31(6), pages 884-894, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Swapan Kumar Saha & Guijun Zhuang & Sihan Li, 2020. "Will Consumers Pay More for Efficient Delivery? An Empirical Study of What Affects E-Customers’ Satisfaction and Willingness to Pay on Online Shopping in Bangladesh," Sustainability, MDPI, vol. 12(3), pages 1-22, February.
    2. Umair Akram & Melinda Timea Fülöp & Adriana Tiron-Tudor & Dan Ioan Topor & Sorinel Căpușneanu, 2021. "Impact of Digitalization on Customers’ Well-Being in the Pandemic Period: Challenges and Opportunities for the Retail Industry," IJERPH, MDPI, vol. 18(14), pages 1-21, July.
    3. Ardvin Kester S. Ong & Yogi Tri Prasetyo & Lance Albert S. De Leon & Irene Dyah Ayuwati & Reny Nadlifatin & Satria Fadil Persada, 2022. "Plantitas/Plantitos Preference Analysis on Succulents Attributes and Its Market Segmentation: Integrating Conjoint Analysis and K-means Clustering for Gardening Marketing Strategy," Sustainability, MDPI, vol. 14(24), pages 1-24, December.
    4. Xiaxia Ma & Wenliang Bian & Xiqing Yang & Shengnan Niu & Yongming Cai & Jie Guan & Wenbin Wang, 2022. "Online Retailer’s Contingent Free-Shipping Decisions under Large-Scale Promotions Considering Delayed Delivery," Sustainability, MDPI, vol. 14(17), pages 1-22, August.
    5. Eliza Nichifor & Radu Constantin Lixăndroiu & Silvia Sumedrea & Ioana Bianca Chițu & Gabriel Brătucu, 2021. "How Can SMEs Become More Sustainable? Modelling the M-Commerce Consumer Behaviour with Contingent Free Shipping and Customer Journey’s Touchpoints Optimisation," Sustainability, MDPI, vol. 13(12), pages 1-27, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fennell, Patrick B. & Coleman, Joshua T. & Kuo, Andrew, 2020. "The moderating role of donation quantifiers on price fairness judgments," Journal of Business Research, Elsevier, vol. 110(C), pages 464-473.
    2. Urvashi Tandon & Amit Mittal & Sridhar Manohar, 2021. "Examining the impact of intangible product features and e-commerce institutional mechanics on consumer trust and repurchase intention," Electronic Markets, Springer;IIM University of St. Gallen, vol. 31(4), pages 945-964, December.
    3. Shao, Xiao-Feng, 2017. "Free or calculated shipping: Impact of delivery cost on supply chains moving to online retailing," International Journal of Production Economics, Elsevier, vol. 191(C), pages 267-277.
    4. Chen, Jing & Yu, Bo & Chen, Bintong & Liu, Zhuojun, 2023. "Lenient vs. stringent returns policies in the presence of fraudulent returns: The role of customers’ fairness perceptions," Omega, Elsevier, vol. 117(C).
    5. T. M. Rofin & Biswajit Mahanty, 2021. "Fulfillment mode selection for Indian online sellers under free and flat rate shipping policies," Electronic Commerce Research, Springer, vol. 21(2), pages 263-296, June.
    6. Malc, Domen & Mumel, Damijan & Pisnik, Aleksandra, 2016. "Exploring price fairness perceptions and their influence on consumer behavior," Journal of Business Research, Elsevier, vol. 69(9), pages 3693-3697.
    7. Xiaxia Ma & Wenliang Bian & Xiqing Yang & Shengnan Niu & Yongming Cai & Jie Guan & Wenbin Wang, 2022. "Online Retailer’s Contingent Free-Shipping Decisions under Large-Scale Promotions Considering Delayed Delivery," Sustainability, MDPI, vol. 14(17), pages 1-22, August.
    8. Chu, Wujin & Lee, Jeongmin & Baumann, Chris & Kang, Christine, 2020. "Fairness perception of ancillary fees: Industry differences and communication strategies," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    9. Anna Kukla-Gryz & Joanna Tyrowicz & Michał Krawczyk, 2021. "Digital piracy and the perception of price fairness: evidence from a field experiment," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 45(1), pages 105-131, March.
    10. Hu Wang & Di Li & Changbin Jiang & Yuxiang Zhang, 2023. "Exploring the Interactive Relationship between Retailers’ Free Shipping Decisions and Manufacturers’ Product Sales in Digital Retailing," Sustainability, MDPI, vol. 15(17), pages 1-19, August.
    11. Kuester, Sabine & Feurer, Sven & Schuhmacher, Monika C. & Reinartz, Dominik, 2015. "Comparing the incomparable? How consumers judge the price fairness of new products," International Journal of Research in Marketing, Elsevier, vol. 32(3), pages 272-283.
    12. Eliza Nichifor & Radu Constantin Lixăndroiu & Silvia Sumedrea & Ioana Bianca Chițu & Gabriel Brătucu, 2021. "How Can SMEs Become More Sustainable? Modelling the M-Commerce Consumer Behaviour with Contingent Free Shipping and Customer Journey’s Touchpoints Optimisation," Sustainability, MDPI, vol. 13(12), pages 1-27, June.
    13. Zhen Fang & Yi-Chun (Chad) Ho & Xue (Jane) Tan & Yong Tan, 2021. "Show Me the Money: The Economic Impact of Membership-Based Free Shipping Programs on E-Tailers," Information Systems Research, INFORMS, vol. 32(4), pages 1115-1127, December.
    14. Richards, Timothy J. & Liaukonyte, Jura & Streletskaya, Nadia A., 2016. "Personalized pricing and price fairness," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 138-153.
    15. Seung Hwan (Shawn) Lee, 2019. "An Exploration of Initial Purchase Price Dispersion and Service-Subscription Duration," Sustainability, MDPI, vol. 11(9), pages 1-14, April.
    16. Fassnacht, Martin & Unterhuber, Sebastian, 2016. "Consumer response to online/offline price differentiation," Journal of Retailing and Consumer Services, Elsevier, vol. 28(C), pages 137-148.
    17. Kalyanaram, Gurumurthy & Winer, Russell S., 2022. "Behavioral response to price: Data-based insights and future research for retailing," Journal of Retailing, Elsevier, vol. 98(1), pages 46-70.
    18. Tripathi, Sanjeev, 2017. "Et tu, Brute? How unfair!," Journal of Retailing and Consumer Services, Elsevier, vol. 39(C), pages 79-92.
    19. Xia, Lan & Roggeveen, Anne L., 2022. "How collective stress affects price fairness perceptions: The role of nostalgia," Journal of Business Research, Elsevier, vol. 152(C), pages 361-371.
    20. Ferguson, Jodie L. & Brown, Brian P. & Johnston, Wesley J., 2017. "Partitioned pricing, price fairness perceptions, and the moderating effects of brand relationships in SME business markets," Journal of Business Research, Elsevier, vol. 72(C), pages 80-92.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joreco:v:48:y:2019:i:c:p:105-112. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing-and-consumer-services .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.