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.

Examining the Retail Delivery Choice Behavior in a Technology-Aware Market

“…Ref. [4] evaluate the willingness to pay for the compensation service in case of delayed delivery in China. They conduct a discrete choice experiment where individuals are presented with a form with 6 sheets.…”

“…Additionally, this paper investigates whether there is a relationship between socio-demographic characteristics and the attributes of the delivery service. Building on the works of [3,4], we conducted a Discrete Choice Experiment (DCE). For this purpose, we designed a survey and applied it to 424 consumers in the city of Santiago, Chile.…”

The Effects Of Online Customer Reviews And Customer Experiences On Reuse Intention Of Mobile Food Ordering Application (MFOA)

“…According to Pan et al (2021), the increase in the rate of ordering food using the platform showed that the speed in the delivery of ordered food, payments on time (debts), and discounts when payments were made in cash were some of the things that platform or app users want. Alalwan (2020) adds that what has been researched in Jordan related to the interest in reusing food order applications is caused by online reviews, online ratings, real-time driver position tracking, hedonic motivation, food prices, and expectations of the speed of food arrivals at the end of the year.…”