Customers’ valuation of time and convenience in e-fulfillment

Abstract

Purpose

The purpose of this paper is to derive monetary benchmarks and managerial implications for omni-channel retailers’ B2C e-fulfillment strategies by investigating the trade-offs between lead time, delivery convenience and total price including shipment in the context of online electronics retailing.

Design/methodology/approach

Based on a choice-based conjoint analysis among 550 US online shoppers, the monetary values of lead time and convenience were calculated in a log-log regression model. In addition, latent class segmentation was applied to identify consumer segments according to their differing e-fulfillment preferences.

Findings

From a consumer perspective, the analysis suggests that price is the most important criteria in omni-channel retailer selection, followed by lead time and convenience. The value of time is, on average, $3.61 per day. Regarding convenience, the results indicate that delivery to the home is highly preferred over pick-up options. The value of the consumer’s travel time was estimated at $10.62 per hour. The latent class segmentation identified four segment groups with different preferences.

Research limitations/implications

To validate the findings, future research could analyze real data from omni-channel retailers’ customers’ buying behavior. It should also be interesting to extend the research to other price ranges, market segments and e-fulfillment factors, such as return options, shop ratings and membership programs aiming for further generalization.

Practical implications

The findings guide omni-channel retailers to focus on efficient B2C e-fulfillment strategies. Considerable competitive advantages may be gained by reducing lead times and offering convenient delivery in line with the lead time valuation of the identified customer segment.

Originality/value

This study fills gaps in the academic research of consumer behavior in retailer selection, which has primarily concentrated on the choice between “brick-and-mortar” and online sales channels. It paves the way for a more service-oriented perspective in omni-channel retailing research.

Citation

Gawor, T. and Hoberg, K. (2019), "Customers’ valuation of time and convenience in e-fulfillment", International Journal of Physical Distribution & Logistics Management, Vol. 49 No. 1, pp. 75-98. https://doi.org/10.1108/IJPDLM-09-2017-0275