| Abstract: | The provision of outstanding delivery service is increasingly critical for retailers engaged in e-commerce. As a result, many are interested in switching from their existing carrier to one that is more highly capable in order to better serve their customers. In making this switch, the retailer faces a dilemma: Better carriers cost more, so they will either have to accept a reduction in profit or increase the shipping charge to their customers. While research shows that shoppers recognize certain carriers as superior—and both theory and empirical evidence suggest that people are willing to accept certain cost-justified increases to what they are charged in a transaction—studies also show that online shoppers loathe shipping charges. Thus, what is an e-retailer to do? Through a series of vignette experiments, we examine the question of how online shoppers respond to a shipping charge increase when the retailer switches to a more highly perceived delivery carrier. Our findings show that shoppers are not particularly accepting of the switch, and while they are not likely to complain, resulting purchase intentions are notably low. Alternative strategies for implementing the carrier switch are also explored. |
