Consumer Transportation Costs and the Value of E-commerce: Evidence from the Dutch Apparel Industry

53 Pages Posted: 4 Jun 2020 Last revised: 9 Dec 2021

See all articles by Yufeng Huang

Yufeng Huang

University of Rochester - Simon Business School

Bart J. Bronnenberg

Tilburg University, CentER

Multiple version iconThere are 2 versions of this paper

Date Written: December 8, 2021

Abstract

Why do consumers value online shopping? We demonstrate that consumer transportation cost savings are at least as important to consumer welfare as their gains from variety. To estimate transportation costs, we assemble novel microdata from the Dutch retail apparel industry and complement these data with precise locations of consumers and stores. We estimate a multiple discrete choice model to characterize consumers' choice of retailer, channel (online/offline), and purchase quantity. Our estimates imply that, in 2018, an average consumer's welfare gain from e-commerce in the apparel category is approximately €450. Reduction of transportation costs accounts for more than half of this gain.

Keywords: E-Commerce, Retail, Convenience, Transportation Costs, Online/Offline

JEL Classification: D12, L81, M31

Suggested Citation

Huang, Yufeng and Bronnenberg, Bart J., Consumer Transportation Costs and the Value of E-commerce: Evidence from the Dutch Apparel Industry (December 8, 2021). Available at SSRN: https://ssrn.com/abstract=3596460 or http://dx.doi.org/10.2139/ssrn.3596460

Yufeng Huang (Contact Author)

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

HOME PAGE: http://https://sites.google.com/site/yufenghuangphd/

Bart J. Bronnenberg

Tilburg University, CentER ( email )

Warandelaan 2
Tilburg, 5037 AB
Netherlands
+31 13 466 8939 (Phone)
+31 13 466 8354 (Fax)

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