Impact of Free Shipping Threshold on PC and Mobile Channels: Evidence from an Online Retailer

28 Pages Posted: 29 Jul 2019

See all articles by Fujie Jin

Fujie Jin

Kelley School of Business, Indiana University

Fei Gao

Indiana University Bloomington

Jianbin Li

Huazhong University of Science and Technology

Date Written: July 25, 2019

Abstract

Many online retailers offer free shipping services if customers spend more than a threshold amount. We use a unique transaction-level dataset from a large online retailer to study the impacts of free shipping threshold on consumer shopping behavior across two different online channels, mobile and PC channels. Specifically, we focus on customer order padding behavior, i.e., strategically adding items to a shopping cart to qualify for free shipping. We find that customers are more likely to pad their orders on the PC channel than on the mobile channel. We attribute this impact to the different search cost on the two channels. Furthermore, we find that the way customers pad their orders is different. Specifically, in order to increase basket size, customers on the mobile channel rely more on buying a larger quantity of the same item, while users placing their order on the PC channel prefer to add new products to the shopping cart and/or to purchase higher-priced substitutes.

Keywords: e-commerce, mobile, multi-channel retail, free shipping threshold

Suggested Citation

Jin, Fujie and Gao, Fei and Li, Jianbin, Impact of Free Shipping Threshold on PC and Mobile Channels: Evidence from an Online Retailer (July 25, 2019). Available at SSRN: https://ssrn.com/abstract=3426616 or http://dx.doi.org/10.2139/ssrn.3426616

Fujie Jin

Kelley School of Business, Indiana University ( email )

Business 670
1309 E. Tenth Street
Bloomington, IN 47401
United States
812-855-0943 (Phone)

HOME PAGE: http://https://kelley.iu.edu/facultyglobal/directory/FacultyProfile.cfm?netID=jinf

Fei Gao (Contact Author)

Indiana University Bloomington ( email )

1309 E 10th St
Bloomington, IN 47405
United States

Jianbin Li

Huazhong University of Science and Technology ( email )

Wuhan, Hubei
China

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