Free shipping

Chinonso Ezenwa Etumnu

Applied Economics Letters, 2023, vol. 30, issue 16, 2161-2164

Abstract: A recent study (Gil et. al., 2020) found that free shipping can hurt an online retailer if their optimal strategy is to charge shipping fees. But does this observation apply to Amazon? To ascertain this, I estimate the effect of free shipping on grocery sales using data from Amazon Canada. I find that freely shipped products receive more sales on average. Specifically, being eligible for free shipping is associated with an average increase of 435 in the best sellers rank of ground coffee products on amazon.ca. The increased sales are likely because Amazon’s customers are hesitant to pay shipping fees, and freely shipped products have lower prices and a higher average rating, and these product attributes drive demand.

Date: 2023
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DOI: 10.1080/13504851.2022.2094871

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