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Shipping fee schedules and return behavior

Author

Listed:
  • Anke Lepthien

    (University of Hamburg)

  • Michel Clement

    (University of Hamburg)

Abstract

We study the influence of shipping fee schedules on the return behavior of customers. Based on a randomized field experiment, we analyze the behavior of visitors of an online shop. Specifically, online shop visitors are assigned to one of seven different shipping fee structures where (a) minimum order sizes, (b) shipping fees, and (c) threshold-based free shipping levels are varied. We observe the number and amount of purchases as well as the number and amount of returns, which allows us to calculate the value of the purchased goods after returns in € (net order value). We find a positive effect of shipping fees on purchase value (pre- and post-return). However, we find that minimum order values lead to slightly more returns by current customers and that threshold-based free shipping leads across all customers to a higher number of strategic returns because they tend to return more items. Threshold-based free shipping decreases purchase incidence (but not purchase value). Interestingly, we do not find negative effects of minimum order value on purchase incidence or purchase value.

Suggested Citation

  • Anke Lepthien & Michel Clement, 2019. "Shipping fee schedules and return behavior," Marketing Letters, Springer, vol. 30(2), pages 151-165, June.
    • Handle: RePEc:kap:mktlet:v:30:y:2019:i:2:d:10.1007_s11002-019-09486-8
    DOI: 10.1007/s11002-019-09486-8
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    References listed on IDEAS

    as
    1. Janakiraman, Narayan & Syrdal, Holly A. & Freling, Ryan, 2016. "The Effect of Return Policy Leniency on Consumer Purchase and Return Decisions: A Meta-analytic Review," Journal of Retailing, Elsevier, vol. 92(2), pages 226-235.
    2. Eric T. Anderson & Karsten Hansen & Duncan Simester, 2009. "The Option Value of Returns: Theory and Empirical Evidence," Marketing Science, INFORMS, vol. 28(3), pages 405-423, 05-06.
    3. Bonifield, Carolyn & Cole, Catherine & Schultz, Randall L., 2010. "Product returns on the Internet: A case of mixed signals?," Journal of Business Research, Elsevier, vol. 63(9-10), pages 1058-1065, September.
    4. repec:bla:jindec:v:49:y:2001:i:4:p:541-58 is not listed on IDEAS
    5. Michael D. Smith & Erik Brynjolfsson, 2001. "Consumer Decision-making at an Internet Shopbot: Brand Still Matters," NBER Chapters, in: E-commerce, pages 541-558, National Bureau of Economic Research, Inc.
    6. 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.
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    Cited by:

    1. Takanori Sakai & Yusuke Hara & Ravi Seshadri & Andr'e Alho & Md Sami Hasnine & Peiyu Jing & ZhiYuan Chua & Moshe Ben-Akiva, 2020. "E-Commerce Delivery Demand Modeling Framework for An Agent-Based Simulation Platform," Papers 2010.14375, arXiv.org.
    2. El Kihal, Siham & Shehu, Edlira, 2022. "It's not only what they buy, it's also what they keep: Linking marketing instruments to product returns," Journal of Retailing, Elsevier, vol. 98(3), pages 558-571.
    3. Duong, Quang Huy & Zhou, Li & Meng, Meng & Nguyen, Truong Van & Ieromonachou, Petros & Nguyen, Duy Tiep, 2022. "Understanding product returns: A systematic literature review using machine learning and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 243(C).

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