Digital and Mobile Commerce
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Paper Number
2615
Paper Type
Completed
Description
Online retailers have to provide customers with an estimate of how fast an order can be delivered before they purchase it. Retailers can strategically adjust this delivery speed promise online without changing offline infrastructure, and it may fundamentally impact business outcomes. In this research, we study the causal effect of retailers' delivery speed promise on customer behaviors and business performance. Collaborating with Collage.com, we exogenously varied the disclosed delivery speed estimates online while keeping the physical delivery speed unchanged. Using a difference-in-differences identification and a dataset with 212,340 transactions in 7,090 cities, we find that a one-day faster promise increases sales by 0.73%, profits by 2.0%, and value per order by 3.5%; a one-day slower promise has similar effects in the opposite direction. However, the aggressive disclosure increases product returns and deteriorates customer retention. Our findings provide managerial insights that retailers could leverage to customize their delivery promises.
Recommended Citation
Cui, Ruomeng; Lu, Zhikun; Sun, Tianshu; and Golden, Joseph M., "Sooner or Later? Promising Delivery Speed in Online Retail" (2021). ICIS 2021 Proceedings. 13.
https://aisel.aisnet.org/icis2021/digital_commerce/digital_commerce/13
Sooner or Later? Promising Delivery Speed in Online Retail
Online retailers have to provide customers with an estimate of how fast an order can be delivered before they purchase it. Retailers can strategically adjust this delivery speed promise online without changing offline infrastructure, and it may fundamentally impact business outcomes. In this research, we study the causal effect of retailers' delivery speed promise on customer behaviors and business performance. Collaborating with Collage.com, we exogenously varied the disclosed delivery speed estimates online while keeping the physical delivery speed unchanged. Using a difference-in-differences identification and a dataset with 212,340 transactions in 7,090 cities, we find that a one-day faster promise increases sales by 0.73%, profits by 2.0%, and value per order by 3.5%; a one-day slower promise has similar effects in the opposite direction. However, the aggressive disclosure increases product returns and deteriorates customer retention. Our findings provide managerial insights that retailers could leverage to customize their delivery promises.
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Comments
22-Digital