Evaluating Consumers’ Willingness to Pay for Delay Compensation Services in Intra-City Delivery—A Value Optimization Study Using Choice

Abstract

Intra-city delivery has developed rapidly along with the expansion of the logistics industry. Timely delivery is one of the main requirements of consumers and has become a major challenge to delivery service providers. To compensate for the adverse effects of delivery delays, platforms have launched delay compensation services for consumers who order. This study quantitatively evaluated consumer perception of the delay compensation service in intra-city deliveries using a choice experiment. We explored how different attributes of the delay compensation service plan affect consumer preference and their willingness to pay for the services. These service attributes are “delay probability display”, “compensation amount”, “compensation method”, “penalty method for riders”, and “one-time order price”. Using a multinomial logit model to analyze the questionnaire results, the respondents showed a positive preference for on-time delivery probability display, progressive compensation amount, and cash compensation. The results also show that the respondents opposed the penalty scheme where the riders would bear the compensation costs. Positive preference attributes are conducive to enhancing consumers’ willingness to order and pay for the program. Based on our findings and research conclusions, we proposed several recommendations to improve the delay compensation service program.

Keywords

• light city logistics
• intra-city delivery
• delay compensations
• willingness to order
• choice experiment