Customers’ valuation of time and convenience in e-fulfillment
International Journal of Physical Distribution & Logistics Management
Article publication date: 10 August 2018
Issue publication date: 8 February 2019
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.
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.
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.
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.
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.
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.
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
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