Skip to main content
SpringerLink
Log in

The effect of shipping fee structure on consumers’ online evaluations and choice

  • Original Empirical Research
  • Published:
Journal of the Academy of Marketing Science Aims and scope Submit manuscript

Abstract

This research examines how consumers respond to different shipping fee structures. Focusing on two of the most common shipping fee structures, flat rate shipping and threshold-based free shipping, we first demonstrate that offer evaluations are less (more) favorable with threshold-based free shipping when order value is below (above) the free shipping threshold compared to flat rate shipping. However, when an alternative more important referent is present, the effect of shipping fee structure is attenuated. Second, we show that although perceptions of shipping fees as a profit generator are higher (lower) under threshold-based free shipping relative to flat rate shipping for order values below (above) the free shipping threshold, providing a justification for the shipping fee by explicitly linking it to delivery costs encourages consumers to view the shipping fee as a cost of doing business rather than as a profit generator, thus raising offer evaluations.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51, 1173–82.

    Article  Google Scholar 

  • Barsh, J., Blair, C., & Grosso, C. (2000). How E-tailing can rise from the ashes. The Mckinsey Quarterly, 3, 98–109.

    Google Scholar 

  • Bies, R. J., & Shapiro, D. L. (1988). Voice and justification: their influence on procedural fairness and judgments. Academy of Management Journal, 31, 676–685.

    Article  Google Scholar 

  • Campbell, M. C. (1999). Perceptions of price unfairness: antecedents and consequences. Journal of Marketing Research, 36, 187–199.

    Article  Google Scholar 

  • Chakravarti, D., Krish, R., Paul, P., & Srivastava, J. (2002). Partitioned presentation of multicomponent bundle prices: evaluation, choice, and underlying processing effects. Journal of Consumer Psychology, 12(3), 215–29.

    Article  Google Scholar 

  • Cheema, A. (2008). Surcharges and seller reputation. Journal of Consumer Research, 35(2), 167–77.

    Article  Google Scholar 

  • ComCult Research. (2003). ComCult Study eCommerce. http://www.comcult.com.

  • Darke, P. R., & Dahl, D. W. (2003). Fairness and discounts: the subjective value of a bargain. Journal of Consumer Psychology, 13(3), 328–38.

    Article  Google Scholar 

  • Fiske, S. T., & Taylor, S. E. (1991). Social cognition. New York: McGraw-Hill.

    Google Scholar 

  • Folkes, V. S. (1984). Consumer reactions to product failure: An attributional approach. Journal of Consumer Research, 10 (March), 398–409.

    Google Scholar 

  • Hamilton, R. W., & Srivastava, J. (2008). When 2 + 2 is not the same as 1 + 3:variations in price sensitivity across components of partitioned prices. Journal of Marketing Research, 45(4), 450–61.

    Article  Google Scholar 

  • Hamilton, R. W., Srivastava, J., & Abraham, A. T. (2010). When should you nickel and dime your customers? A manager’s guide to benefits-based price partitioning. MIT Sloan Management Review, 52(1), 59–67.

    Google Scholar 

  • Haws, K. L., & Bearden, W. O. (2006). Dynamic pricing and consumer fairness perceptions. Journal of Consumer Research, 33(December), 304–311.

    Article  Google Scholar 

  • Hsee, C. K., & Leclerc, F. (1998). Will products look more attractive when presented separately or together? Journal of Consumer Research, 25(September), 175–86.

    Article  Google Scholar 

  • Hsee, C. K., Loewenstein, G. F., Blount, S., & Bazerman, M. H. (1999). Preference reversals between joint and separate evaluations of options: a review and theoretical analysis. Psychological Bulletin, 125(5), 576–90.

    Article  Google Scholar 

  • Kahneman, D., & Miller, D. T. (1986). Norm theory: comparing reality to its alternatives. Psychological Review, 93(2), 136–53.

    Article  Google Scholar 

  • Kahneman, D., & Tversky, A. (1979). Prospect theory: an analysis of decision under risk. Econometrica, 47(March), 163–91.

    Google Scholar 

  • Kahneman, D., Knetsch, J. L., & Thaler, R. (1986). Fairness as a constraint on profit seeking: entitlements in the market. The American Economic Review, 76(4), 728–741.

    Google Scholar 

  • Kelley, H. H. (1967). Attributional theory in social psychology. In D. Levine (Ed.) Nebraska symposium of motivation (pp. 192-238). Lincoln: University of Nebraska Press.

  • Lassar, W. M., Folks, V. S., Grewal, D., & Costley, C. (1997). Consumer affective reactions to product problems when the timing of warranty expiration varies. Journal of Business Research, 42, 265–70.

    Article  Google Scholar 

  • Lewis, M. (2006). The effect of shipping fees on customer acquisition, customer retention, and purchase quantities. Journal of Retailing, 82, 13–23.

    Article  Google Scholar 

  • Lewis, M., Singh, V., & Fay, S. (2006). An empirical study of the impact of nonlinear shipping and handling fees on purchase incidence and expenditure decisions. Marketing Science, 25, 51–64.

    Article  Google Scholar 

  • Morwitz, V. G., Greenleaf, E. A., & Johnson, E. J. (1998). Divide and prosper: consumers’ reactions to partitioned prices. Journal of Marketing Research, 35(November), 453–63.

    Article  Google Scholar 

  • Rosen, K. T., & Howard, A. L. (2000). E-retail: gold rush or fool’s gold. California Management Review, 42(3), 72–100.

    Article  Google Scholar 

  • Schindler, R. M., Morrin, M., & Bechwati, N. N. (2005). Shipping charges and shipping charge skepticism: Implications for direct marketers’ pricing formats. Journal of Interactive Marketing, 9, 41–53.

    Article  Google Scholar 

  • Smith, M. D., & Brynjolfsson, E. (2001). Consumer decision making at an internet shopbot: brand still matters. The Journal of Industrial Economics, 49(4), 541–58.

    Google Scholar 

  • Tsiros, M., Mittal, V., & Ross, W. T. (2004). The role of attributions in customer satisfaction. Journal of Consumer Research, 31, 476–483.

    Article  Google Scholar 

  • Weiner, B. (2000). Attributional thoughts about consumer behavior. Journal of Consumer Research, 27(December), 382–387.

    Article  Google Scholar 

  • Xia, L., & Monroe, K. B. (2004). Price partitioning on the internet. Journal of Interactive Marketing, 18(4), 63–73.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. College of Business and Economics, Lehigh University, Bethlehem, PA, 18015, USA

    Nevena T. Koukova

  2. Robert H. Smith School of Business, University of Maryland, College Park, MD, 20742, USA

    Joydeep Srivastava

  3. Institute of Marketing, School of Business and Economics, University of Erlangen-Nuremberg, 90403, Nuremberg, Germany

    Martina Steul-Fischer

Authors
  1. Nevena T. Koukova
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Joydeep Srivastava
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Martina Steul-Fischer
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Nevena T. Koukova.

Additional information

Listed alphabetically, the three authors contributed equally to the article. This research was partially funded by the Alison and Norman Axelrod’74 endowed summer research fellowship awarded to the first author by Lehigh University and by the summer research grant awarded to the second author by the Robert H. Smith School’s Center for Excellence in Service and the Research Committee.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Koukova, N.T., Srivastava, J. & Steul-Fischer, M. The effect of shipping fee structure on consumers’ online evaluations and choice. J. of the Acad. Mark. Sci. 40, 759–770 (2012). https://doi.org/10.1007/s11747-011-0281-2

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11747-011-0281-2

Keywords

Search

Navigation