Abstract
This paper considers the optimal purchasing decisions of a consumer when online retailers provide contingent free shipping service under delay delivery. A consumption decision model for online consumers is proposed by establishing net consumption surplus function under delay delivery, which comprehensively considering all of the conditions including the product price, delay time, free shipping threshold given by online retailers, as well as the consumer's individual characteristics relate to the preference for the product and sensitivity on delay delivery, which can be used to analyze the best purchasing decisions of an online consumer. Finally, a numerical example proves the reliability of the model, and the result shows that a consumer's optimal purchasing decisions mainly depend on the comparison of free shipping cut off level under delay delivery and consumer's specific parameter about the preference for the product and sensitivity on delay time. Simultaneously, it indicates that free delay shipping service with a reasonable threshold could attract additional consumers with middle consumption desire to enlarge purchasing amount, which can be used as a reference for online retailers to set an effective free delay shipping strategy.
Published Version
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