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Pricing for online sellers with different payment schemes

Author

Listed:
  • Na Xu

    (Shandong Technology and Business University)

  • Shizhen Bai

    (Harbin University of Commerce)

  • Hui Yu

    (Harbin University of Science and Technology)

  • Mengqi Zhang

    (Liaoning University)

Abstract

Two types of payment schemes are available for consumers to shopping online. One is pay-to-order, the other is pay-on-delivery. The differences in payment time leading to different trust and convenience experience for consumers, as well as consumer behavior and online seller’s performance. Consumers are divided into two kinds, trust-preferred and convenience-preferred. Consumer’s behaviors are described and firm’s decisions are characterized with game equilibrium model. We show that pay-on-delivery is a better choice for online seller if the service cost or return handing cost is certain small. With trust-preferred consumers, the market demand competition first become fierce and then weaken along with the consumer perceived trust difference, and keep 2:1 ratio finally. With convenience-preferred consumers, the market demand competition intensifies with increasing inconvenience cost. The results are very helpful for decision makers who consider introducing pay-on-delivery in practice.

Suggested Citation

  • Na Xu & Shizhen Bai & Hui Yu & Mengqi Zhang, 2025. "Pricing for online sellers with different payment schemes," Electronic Commerce Research, Springer, vol. 25(1), pages 295-317, February.
    • Handle: RePEc:spr:elcore:v:25:y:2025:i:1:d:10.1007_s10660-023-09690-9
    DOI: 10.1007/s10660-023-09690-9
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