An Empirical Study of the Impact of Nonlinear Shipping and Handling Fees on Purchase Incidence and Expenditure Decisions

Lewis, Michael; Singh, Vishal; Fay, Scott

doi:10.1287/mksc.1050.0150

Cited by 151 publications

(148 citation statements)

References 22 publications

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“…Since the response variable has an ordinal nature, the ordered logit model was used to explore the influence of other factors on homeowners' purchase likelihood of smart irrigation controllers. Previously, the ordered logit model has been used to identify the influence of different variables on consumers' preference and/or purchase likelihood for different products [38][39][40][41][42][43][44]. Following the approach used in Suh et al (2016), the ordered logit model estimates the probability that homeowner i. takes on the value (Y i ) when homeowner i faces the j-th ordered-category for j = 1, · · · , M where M is the number of categories of the ordinal responses [43].…”

Section: Generalized Ordered Logit Modelmentioning

confidence: 99%

Relating Knowledge and Perceptions of Sustainable Water Management to Preferences for Smart Irrigation Technology

et al. 2017

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Abstract:Water quantity and quality concerns in urban environments have prompted conservation groups, governmental agencies, and policy makers to develop and promote residential water conservation programs, including restrictions on residential landscape irrigation practices and incentives for the adoption of water-efficient appliances. Previous literature links household characteristics, financial incentives, and demographic characteristics to the adoption of water-efficient appliances and overall water use. However, relatively little attention has been given toward understanding how homeowners' perceptions and knowledge of smart irrigation technologies affect their preferences or stated purchase likelihood of such irrigation equipment. To address this gap in the literature, this paper identifies perception-and knowledge-related factors that are correlated with the purchase likelihood of smart irrigation controllers. The generalized logit regression model results suggest that knowledge about irrigation systems and residential landscaping are positively correlated with purchase likelihood. Similarly, homeowners' perceptions about conservation efforts, water restrictions, and their neighbors' irrigation habits all increase purchase likelihood. Combined with statistically-significant correlations of several socio-demographic variables and purchase likelihood, these results have theoretical and practical implications, which are summarized in this paper.

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Section: Generalized Ordered Logit Modelmentioning

confidence: 99%

Relating Knowledge and Perceptions of Sustainable Water Management to Preferences for Smart Irrigation Technology

et al. 2017

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“…This consumer heterogeneity is a prerequisite for an MFS program: if all consumers have an equal number of orders per year, the MFS membership fee will be the total shipping fees in a year and all consumers will be indifferent between joining the program or not. Lewis (2006) and Lewis et al (2006) empirically test how free-shipping programs affect order basket size. This effect is not the focus of this paper.…”

Section: Modelmentioning

confidence: 99%

“…Rogowsky (2014) reports that Amazon Prime changes the way people shop and makes Amazon the default shopping destination of its subscribers. Lewis (2006) and Lewis, Singh, and Fay (2006) find free-shipping increases retention rate, greatly increases order incidence rates but leads to smaller order amounts. However they also find the lost revenues from shipping may make firms unprofitable.…”

Section: Introductionmentioning

confidence: 99%

Membership Free Shipping Programs: Effect on Competition and Optimality of Member Fees

Zhong¹,

Lin²

2017

Proceedings of the 50th Hawaii International Conference on System Sciences (2017)

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Fee-based membership free shipping is an important shipping fee schedule in E-Commerce. This paper studies how the membership free shipping (MFS) program affects firm competition and how to set the membership fee optimally. We find MFS relaxes price competition. The firm that adopts MFS has a higher pricing band than the other firm. Both firms have positive profits, strictly better than when membership free shipping is not a choice. The MFS firm subsidizes subscribers, so the subscribers always have a lower average total cost (price plus shipping fee) per order. The MFS firm could still earn a higher profit than the other firm, although the MFS firm's profit excluding membership fee is lower than that of the other firm. The paper also characterizes how to set the optimal membership fee and shows that an intermediate percentage of subscribers is optimal for the firm that adopts the free shipping program.

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“…For example, when evaluating a model of adaptive control of promotional spending, Little (1966) judges the outcome of the sensitivity analysis by observing the model output. Of course, there are many recent uses of sensitivity analysis for this purpose (e.g., Sriram et al 2006, Ho et al 2006, Lewis et al 2006, Naik 2005, Chintagunta 2005, Mitra and Golder 2006. Mazzeo (2006) (Hauser et al 2006).…”

Section: Descriptive (Positive) Models Vs Prescriptive (Normative) Mmentioning

confidence: 99%

Editorial—It’s the Findings, Stupid, Not the Assumptions

Shugan

2007

Marketing Science

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Observing reality is especially valuable. However, without models, every situation at every time on every variable would be unpredictable. Assumptions allow models and theories to assert constancy. Assumptions distill and simplify reality by dismissing the conspicuous but irrelevant. Criticizing assumptions as unrealistic is absurd. Abstraction is the precise virtue of an assumption. For example, seldom are we prisoners facing interrogation, yet the prisoner’s dilemma remains relevant. The adage “A bird in the hand is worth two in the bush” is relevant for more than birds. Unrealistic assumptions that deny current beliefs breed great new theories. Assumptions are analogous to the basic ingredients in a gourmet recipe. Only the final product of the recipe dictates whether the ingredients suffice. Similarly, assumptions are realistic when they produce good theories, satisfactory predictions, valuable implications, and correct recommendations. Output matters far more than input. Realism is only an issue when creatively diagnosing poorly performing models, not when judging model performance. Assumptions are the source of value in empirical analyses. If data sets were truly the source of value, empirical research studies would only greatly devalue the raw data by dramatically reducing rich observations to a few meager summary statistics or estimated parameters. Most empirical research makes a contribution by ignoring (assuming away) most information in the data. We must dramatically shift our attention far away from the hopeless pursuit and sophistry of realistic assumptions to the contribution those assumptions produce. There are scientific methods for evaluating model output (i.e., predictions, findings, implications, recommendation) on criteria such as accuracy, reliability, validity, robustness, and so on. No corresponding objective scientific methods exist for evaluating realism. Realism depends only on personal taste.

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An Empirical Study of the Impact of Nonlinear Shipping and Handling Fees on Purchase Incidence and Expenditure Decisions

Cited by 151 publications

References 22 publications

Relating Knowledge and Perceptions of Sustainable Water Management to Preferences for Smart Irrigation Technology

Relating Knowledge and Perceptions of Sustainable Water Management to Preferences for Smart Irrigation Technology

Membership Free Shipping Programs: Effect on Competition and Optimality of Member Fees

Editorial—It’s the Findings, Stupid, Not the Assumptions

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