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Real e-customer behavioural responses to free delivery and free returns

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Abstract

This study aims to explore the influence of free delivery and free returns on the purchasing and return behaviour of real e-customers in the marketplace. To accomplish this goal, we conducted the study as a fully randomised and controlled experiment in cooperation with nelly.com, a Nordic e-commerce site that specialises in fashion and beauty. Our results suggest that a lenient delivery policy is associated with increased order frequency, decreased average value of purchased items, increased probability of return, and increased average value of returned items. In addition, a lenient return policy was found to be associated with increased order frequency, a decrease in the average value of orders, a decrease in the average value of purchased items, and increased probability of return. However, the effect sizes are generally small, and we conclude that factors such as legislation and competition often force e-tailers to offer free delivery and free returns even though such offers probably would not have been profitable otherwise.

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Notes

  1. The relatively low degree of model fit suggests that it would be optimal to add additional explanatory variables to the analysis in order to capture additional variability of the data generating process and to improve the robustness and reliability of the results.

  2. Because we observed a statistically insignificant increase in the number of orders per unique customer, the increase in total purchases per customer (as found by Petersen & Kumar [25]) may have been a consequence of an increased number of purchases despite a decreased average order value. The study does not provide sufficient data to test this hypothesis.

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Correspondence to Björn Lantz.

Appendix: The newsletter

Appendix: The newsletter

This letter is a translated version of the letter that was sent to the subjects in group A. The subjects in the other groups received corresponding letters.

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Lantz, B., Hjort, K. Real e-customer behavioural responses to free delivery and free returns. Electron Commer Res 13, 183–198 (2013). https://doi.org/10.1007/s10660-013-9125-0

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