Can Combined Shipping for Cross-border Online Shopping be a Gimmick? The Impact of International Shipping Policy on Customers’ Purchase
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E-commerce firms have employed various strategies to encourage cross-border online shopping for global customers, in which the shipping cost plays an important role. Nevertheless, the extant literature provides only a limited explanation on the effect of the shipping cost for customers overseas in an e-commerce context. This research attempts to evaluate the impact of a combined shipping policy, by which items from multiple vendors are combined into the same package and thus the shipping fee for customers is reduced, on customers’ purchase behaviors in e-marketplace. By adopting the difference-in-differences method, our research reveals that the introduction of the combined shipping policy increases a customer’s spending, whereas the inter-purchase time is extended after the policy. Therefore, customers delay their purchase so that they can enjoy the benefit of the combined shipping. In addition, the effect of the combined shipping policy on spending is greater for heavy shoppers than for light shoppers. This finding suggests that the combined shipping policy may have a negative effect on e-marketplace by shrinking the consumption of light shoppers who are less likely to benefit from the combined shipping policy. Our findings show that, although the combined shipping policy can promote more purchases by international shoppers in general, managers should be careful because it may discourage the consumption of light shoppers.
Abstract
E-commerce firms have employed various strategies to encourage cross-border online shopping for global customers, in which the shipping cost plays an important role. Nevertheless, the extant literature provides only a limited explanation on the effect of the shipping cost for customers overseas in an e-commerce context. This research attempts to evaluate the impact of a combined shipping policy, by which items from multiple vendors are combined into the same package and thus the shipping fee for customers is reduced, on customers’ purchase behaviors in e-marketplace. By adopting the difference-in-differences method, our research reveals that the introduction of the combined shipping policy increases a customer’s spending, whereas the inter-purchase time is extended after the policy. Therefore, customers delay their purchase so that they can enjoy the benefit of the combined shipping. In addition, the effect of the combined shipping policy on spending is greater for heavy shoppers than for light shoppers. This finding suggests that the combined shipping policy may have a negative effect on e-marketplace by shrinking the consumption of light shoppers who are less likely to benefit from the combined shipping policy. Our findings show that, although the combined shipping policy can promote more purchases by international shoppers in general, managers should be careful because it may discourage the consumption of light shoppers.