Customer Preferences for Delivery Service Attributes in Attended Home Delivery

Pedro Amorim (), Nicole DeHoratius (), Fredrik Eng-Larsson () and Sara Martins ()
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Pedro Amorim: Institute for Systems and Computer Engineering, Technology and Science, Faculty of Engineering, University of Porto, 4200-465 Porto, Portugal
Nicole DeHoratius: Booth School of Business, University of Chicago, Chicago, Illinois 60637
Fredrik Eng-Larsson: Stockholm Business School, Stockholm University, SE-106 91 Stockholm, Sweden
Sara Martins: Institute for Systems and Computer Engineering, Technology and Science, Faculty of Engineering, University of Porto, 4200-465 Porto, Portugal; Center for Research and Innovation in Business Sciences and Information Systems, ESTG, Polytechnic of Porto, 4610-156 Felgueiras, Portugal

Management Science, 2024, vol. 70, issue 11, 7559-7578

Abstract: Retailers face increasing competitive pressure to determine how best to deliver products purchased online to the end customer. Grocery retailers often require attended home delivery where the customer must be present to receive the delivery. For attended home delivery to function, the retailer and customer must agree on a delivery time slot that works for both parties. Using online data from a grocery retailer, we observe customer preferences for three delivery service attributes associated with each time slot: speed, precision, and timing. We define speed as the expected time between the placement of an order and its delivery, precision as the duration of the offered time slot, and timing as the availability of choices across times of the day and days of the week. We show that customers not only value speed as an attribute of delivery service but that precision and timing are also key drivers of the customer’s time slot selection process. We also observe substantial customer heterogeneity in the willingness of customers to pay for time slots. Customers that differ in their loyalty to the retailer, basket value, basket size, and basket composition exhibit distinct differences in their willingness to pay. We show that retailers with the capability to tailor their time slot offerings to specific customer segments have the potential to generate approximately 9% more shipping revenue than those who cannot. Our findings inform practitioners seeking to design competitive fulfillment strategies and academics modeling customer behavior in the attended home delivery context.

Keywords: omnichannel retailing; time slot management; discrete choice model; willingness to pay; delivery windows (search for similar items in EconPapers)
Date: 2024
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