Customer Preferences for Delivery Service Attributes in Attended Home Delivery

38 Pages Posted: 4 May 2020 Last revised: 31 Aug 2022

See all articles by Pedro Amorim

Pedro Amorim

Universidade do Porto

Nicole DeHoratius

University of Chicago - Booth School of Business

Fredrik Eng-Larsson

Stockholm University - Stockholm Business School

Sara Martins

Universidade do Porto

Date Written: July 26, 2022

Abstract

Retailers face increasing competitive pressure to determine how best to deliver products purchased online to the end customer. Grocery retailers often require attended home delivery where the customer must be present to receive the delivery. For attended home delivery to function, the retailer and customer must agree upon a delivery time slot that works for both parties.

Using online data from a grocery retailer, we observe customer preferences for three delivery service attributes associated with each time slot: speed, precision, and timing. We define speed as the expected time between the placement of an order and its delivery, precision as the duration of the offered time slot, and timing as the availability of choices across times of the day and days of the week. We show that customers not only value speed as an attribute of delivery service but that precision and timing are also key drivers of the customers time slot selection process.

We also observe substantial customer heterogeneity in the willingness of customers to pay for time slots. Customers that differ in their loyalty to the retailer, basket value, basket size, and basket composition exhibit distinct differences in their willingness to pay. We show that retailers with the capability to tailor their time slot offerings to specific customer segments have the potential to generate approximately 10% more shipping revenue than those who cannot. Our findings inform practitioners seeking to design competitive fulfillment strategies as well as academics modeling customer behavior in the attended home delivery context.

Keywords: Omnichannel Retailing, Attended Home Delivery, Time Slot Management, Discrete Choice Model, Willingness to Pay, Delivery Windows.

Suggested Citation

Amorim, Pedro and DeHoratius, Nicole and Eng-Larsson, Fredrik and Martins, Sara, Customer Preferences for Delivery Service Attributes in Attended Home Delivery (July 26, 2022). Chicago Booth Research Paper No. 20-07, Available at SSRN: https://ssrn.com/abstract=3592597 or http://dx.doi.org/10.2139/ssrn.3592597

Pedro Amorim

Universidade do Porto ( email )

Rua Dr. Roberto Frias
4200-464 Porto
Portugal

Nicole DeHoratius (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Fredrik Eng-Larsson

Stockholm University - Stockholm Business School ( email )

Sweden

Sara Martins

Universidade do Porto ( email )

Rua Dr. Roberto Frias
4200-464 Porto
Portugal

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