Pricing for online sellers with different payment schemes

Na Xu (), Shizhen Bai, Hui Yu and Mengqi Zhang
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Na Xu: Shandong Technology and Business University
Shizhen Bai: Harbin University of Commerce
Hui Yu: Harbin University of Science and Technology
Mengqi Zhang: Liaoning University

Electronic Commerce Research, 2025, vol. 25, issue 1, No 11, 295-317

Abstract: Abstract Two types of payment schemes are available for consumers to shopping online. One is pay-to-order, the other is pay-on-delivery. The differences in payment time leading to different trust and convenience experience for consumers, as well as consumer behavior and online seller’s performance. Consumers are divided into two kinds, trust-preferred and convenience-preferred. Consumer’s behaviors are described and firm’s decisions are characterized with game equilibrium model. We show that pay-on-delivery is a better choice for online seller if the service cost or return handing cost is certain small. With trust-preferred consumers, the market demand competition first become fierce and then weaken along with the consumer perceived trust difference, and keep 2:1 ratio finally. With convenience-preferred consumers, the market demand competition intensifies with increasing inconvenience cost. The results are very helpful for decision makers who consider introducing pay-on-delivery in practice.

Keywords: Pay-to-order; Pay-on-delivery; Trust; Convenience; Pricing; Sinking market (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10660-023-09690-9

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