Development of a Partial Shipping Fees Pricing Model to Influence Consumers’ Purchase Intention under the COVID-19 Pandemic

Abstract

The COVID-19 pandemic is accelerating the rapid development of the digital economy. Previous studies have indicated that shipping fees are essential in delivery strategies and significantly impact order generation rates. According to market research, 68% of consumers would increase their orders to reach the minimum threshold for free delivery. However, previous studies have focused on the problem of setting free shipping thresholds, so the existing model of the e-commerce platform only allows consumers to choose whether to pay the total shipping fees or conditional free delivery with a free shipping threshold. A lack of literature concerns the partial pay for shipping fees before reaching the free shipping threshold. Therefore, this study proposes a new pricing model for shipping strategy that allows consumers to pay partial shipping fees. This model can increase the flexibility of consumer choice, thus increasing consumers’ willingness to purchase, which in turn increases the revenue of the e-commerce platform. The model was validated for 9-month on the e-commerce platform of a Smart-Integration company. The results showed that after introducing the new pricing model, the e-commerce platform’s sales grew by about 9%. This proposed model’s theoretical extension and empirical results can remedy the research gap in the extant literature.

Keywords

• COVID-19
• socio-economic factors
• e-commerce platform
• partial pay
• shipping fees