Can free-shipping hurt online retailers?

In this paper, we investigate optimal pricing strategies for an online grocery retailer that derives its profits from delivery fees and grocery sales. We base our theoretical framework on the well-established work of Schmalensee (Bell Journal of Economics12(2), 445–466, 1981) in two-part pricing, wh...

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Detalles Bibliográficos
Autores: Gil, R. (Ricard)|||/items/b4e033fc-53ca-49b3-9986-2af37638442d, Korkmaz, E. (Evsen)|||/items/e0030651-3387-4178-ba06-89a7fd71818c, Sahin, O. (Ozge)|||/items/ddc234b4-3904-4419-ae24-419dd796990e
Tipo de recurso: artículo
Fecha de publicación:2020
País:España
Institución:Universidad de Navarra
Repositorio:Dadun. Depósito Académico Digital de la Universidad de Navarra
Idioma:inglés
OAI Identifier:oai:dadun.unav.edu:10171/117053
Acceso en línea:https://hdl.handle.net/10171/117053
Access Level:acceso abierto
Palabra clave:Metering
Price discrimination
Online grocery sales
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oai_identifier_str oai:dadun.unav.edu:10171/117053
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repository_id_str
spelling Can free-shipping hurt online retailers?Gil, R. (Ricard)|||/items/b4e033fc-53ca-49b3-9986-2af37638442dKorkmaz, E. (Evsen)|||/items/e0030651-3387-4178-ba06-89a7fd71818cSahin, O. (Ozge)|||/items/ddc234b4-3904-4419-ae24-419dd796990eMeteringPrice discriminationOnline grocery salesIn this paper, we investigate optimal pricing strategies for an online grocery retailer that derives its profits from delivery fees and grocery sales. We base our theoretical framework on the well-established work of Schmalensee (Bell Journal of Economics12(2), 445–466, 1981) in two-part pricing, while allowing for repeat purchase occasions. We derive testable implications that we take to data using a unique dataset detailing transaction information from an online grocery retailer in a Western European country. We find that an increase in the number of deliveries is associated with a greater-than-proportional increase in grocery sales, implying that preferences for deliveries and groceries are negatively correlated. Therefore, counter to the current popularity of free shipping, the observed strategy of discounting groceries and charging high delivery fees appears to be optimal in our empirical setting.SpringerDadun. Depósito Académico Digital Universidad de Navarra20202020-04-0220202020-04-02journal articlehttp://purl.org/coar/resource_type/c_6501info:eu-repo/semantics/articleapplication/pdfhttps://hdl.handle.net/10171/117053reponame:Dadun. Depósito Académico Digital de la Universidad de Navarrainstname:Universidad de NavarraInglésengopen accesshttp://purl.org/coar/access_right/c_abf2info:eu-repo/semantics/openAccessoai:dadun.unav.edu:10171/1170532026-06-21T12:47:57Z
dc.title.none.fl_str_mv Can free-shipping hurt online retailers?
title Can free-shipping hurt online retailers?
spellingShingle Can free-shipping hurt online retailers?
Gil, R. (Ricard)|||/items/b4e033fc-53ca-49b3-9986-2af37638442d
Metering
Price discrimination
Online grocery sales
title_short Can free-shipping hurt online retailers?
title_full Can free-shipping hurt online retailers?
title_fullStr Can free-shipping hurt online retailers?
title_full_unstemmed Can free-shipping hurt online retailers?
title_sort Can free-shipping hurt online retailers?
dc.creator.none.fl_str_mv Gil, R. (Ricard)|||/items/b4e033fc-53ca-49b3-9986-2af37638442d
Korkmaz, E. (Evsen)|||/items/e0030651-3387-4178-ba06-89a7fd71818c
Sahin, O. (Ozge)|||/items/ddc234b4-3904-4419-ae24-419dd796990e
author Gil, R. (Ricard)|||/items/b4e033fc-53ca-49b3-9986-2af37638442d
author_facet Gil, R. (Ricard)|||/items/b4e033fc-53ca-49b3-9986-2af37638442d
Korkmaz, E. (Evsen)|||/items/e0030651-3387-4178-ba06-89a7fd71818c
Sahin, O. (Ozge)|||/items/ddc234b4-3904-4419-ae24-419dd796990e
author_role author
author2 Korkmaz, E. (Evsen)|||/items/e0030651-3387-4178-ba06-89a7fd71818c
Sahin, O. (Ozge)|||/items/ddc234b4-3904-4419-ae24-419dd796990e
author2_role author
author
dc.contributor.none.fl_str_mv Dadun. Depósito Académico Digital Universidad de Navarra
dc.subject.none.fl_str_mv Metering
Price discrimination
Online grocery sales
topic Metering
Price discrimination
Online grocery sales
description In this paper, we investigate optimal pricing strategies for an online grocery retailer that derives its profits from delivery fees and grocery sales. We base our theoretical framework on the well-established work of Schmalensee (Bell Journal of Economics12(2), 445–466, 1981) in two-part pricing, while allowing for repeat purchase occasions. We derive testable implications that we take to data using a unique dataset detailing transaction information from an online grocery retailer in a Western European country. We find that an increase in the number of deliveries is associated with a greater-than-proportional increase in grocery sales, implying that preferences for deliveries and groceries are negatively correlated. Therefore, counter to the current popularity of free shipping, the observed strategy of discounting groceries and charging high delivery fees appears to be optimal in our empirical setting.
publishDate 2020
dc.date.none.fl_str_mv 2020
2020-04-02
2020
2020-04-02
dc.type.none.fl_str_mv journal article
http://purl.org/coar/resource_type/c_6501
dc.type.openaire.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv https://hdl.handle.net/10171/117053
url https://hdl.handle.net/10171/117053
dc.language.none.fl_str_mv Inglés
eng
language_invalid_str_mv Inglés
language eng
dc.rights.none.fl_str_mv open access
http://purl.org/coar/access_right/c_abf2
dc.rights.openaire.fl_str_mv info:eu-repo/semantics/openAccess
rights_invalid_str_mv open access
http://purl.org/coar/access_right/c_abf2
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Springer
publisher.none.fl_str_mv Springer
dc.source.none.fl_str_mv reponame:Dadun. Depósito Académico Digital de la Universidad de Navarra
instname:Universidad de Navarra
instname_str Universidad de Navarra
reponame_str Dadun. Depósito Académico Digital de la Universidad de Navarra
collection Dadun. Depósito Académico Digital de la Universidad de Navarra
repository.name.fl_str_mv
repository.mail.fl_str_mv
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