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Threshold free shipping policies for internet shoppers

Author

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  • Huang, Wen-Hsien
  • Cheng, Yi-Ching

Abstract

This study examines how consumers evaluate and respond to two economically equivalent but different forms of threshold free shipping (TFS) policy: piece-based or dollar-based (e.g., Regular: $25; free shipping on orders of “4 items” as opposed to “$100”) offered by an online store. We first demonstrate that a piece-based TFS will result in a higher intention to shop than a dollar-based TFS. However, this effect is attenuated when information about the shipping charge is present (e.g., “$4.99 flat rate shipping. Free shipping on orders of ___”) or when the time restriction for the TFS policy is short (e.g., “today only”). Finally, the effect of the TFS policy on intention to shop is shown to be mediated by the consumer’s evaluation of the offer. The observations have important implications for internet retailers.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:transa:v:82:y:2015:i:c:p:193-203
    DOI: 10.1016/j.tra.2015.09.015
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    Cited by:

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    2. 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.
    3. Li, Yiming & Li, Gang & Tayi, Giri Kumar & Cheng, T.C.E., 2021. "Return shipping insurance: Free versus for-a-fee?," International Journal of Production Economics, Elsevier, vol. 235(C).
    4. Kapoor, Anuj Pal & Vij, Madhu, 2021. "Following you wherever you go: Mobile shopping ‘cart-checkout’ abandonment," Journal of Retailing and Consumer Services, Elsevier, vol. 61(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. 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.
    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. 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.

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