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.
Highlights
The digital economy has seen a tremendous expansion of e-business in recent years, with most developed countries experiencing double-digit growth rates
According to a report published by the United Nations, the dramatic growth of ecommerce due to movement restrictions caused by COVID-19 increased the share of online retail sales in total retail sales from 16% to 19% in 2020 [1]
Shipping fees are an essential factor with two perspectives on the e-commerce platforms
Summary
The digital economy has seen a tremendous expansion of e-business in recent years, with most developed countries experiencing double-digit growth rates. This increasing trend was accompanied by the chain reaction of the COVID-19 pandemic. As the digital economy grows, successful e-businesses can provide companies with an expanded customer base and new opportunities to extend their markets. According to a report published by the United Nations, the dramatic growth of ecommerce due to movement restrictions caused by COVID-19 increased the share of online retail sales in total retail sales from 16% to 19% in 2020 [1]. The pandemic triggers a rethinking of consumption and lifestyles, and for those companies that can successfully capture the new trend, the pandemic becomes an opportunity to grow. According to the Ministry of Economic Affairs of the Republic of China [3], online retail sales in Taiwan grew to USD
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