The impact of delivery lead time on customer conversion
(2020) MIOM05 20192Production Management
- Abstract
- Delivery lead time (DLT) is seen as one of the most important service factors
affecting the consumers willingness to fulfill a purchase within online retailing (Esperet al., 2003). The purpose of this thesis is to investigate the effect variations in the offered DLT have on customer conversion rate within e-commerce. This is done by analyzing historical online customer demand data from a case company within the furniture industry. Further, two other factors are studied in relation to DLT, delivery charge and consumer commitment. The purpose was to further understand how these factors influence consumers behaviour in relation to the offered DLT. The research questions for the study related to the Swedish market and were the following: How... (More) - Delivery lead time (DLT) is seen as one of the most important service factors
affecting the consumers willingness to fulfill a purchase within online retailing (Esperet al., 2003). The purpose of this thesis is to investigate the effect variations in the offered DLT have on customer conversion rate within e-commerce. This is done by analyzing historical online customer demand data from a case company within the furniture industry. Further, two other factors are studied in relation to DLT, delivery charge and consumer commitment. The purpose was to further understand how these factors influence consumers behaviour in relation to the offered DLT. The research questions for the study related to the Swedish market and were the following: How does delivery-lead-time affect the probability of an fulfilled order for online furniture sales? and (2). How is the sensitivity for changes in DLT affected by the factors delivery-cost and consumer commitment?.
The analysis was done using a quantitative approach of logistic regression models. The generated models displayed statistical significance and could quantify the relationship between the variables DLT and conversion rate. The overall samples showed that when offered an DLT increase from three to ten days the probability of a consumer fulfilling the purchase decreases with 10.67 %, which for the case company studied, could be translated to a potential loss of sales of 68 million SEK per year. Further, the conducted study indicate that a high consumer commitment make consumers less sensitive to changes in DLT, while delivery charge have the opposite effect. That is a high delivery charge make consumers more sensitive to longer DLT.
Historically research related to the topic of DLT has been done using surveys or interviews to study consumer preferences. This is what makes this study different as it is based on actual sales data enabling the study of consumers actual behaviour, rather than their experienced preferences. The work of this thesis contributes to the research by quantifying the relationship of DLT and conversion rate. (Less) - Popular Abstract
- Have you ever experienced that the delivery time is too long when purchasing something online? Well, it is well in line
with theories concerning consumer behaviour and waiting time (Bitner, 1990). However, the magnitude of change in
consumer behaviour when faced with different delivery lead times (DLTs), is not as researched. We have conducted a
study at a furniture retailer in Sweden, analyzing their online demand data and how the conversion rate is affected by
changes in the offered DLT. Delivery time is something that is increasing in importance as more and more customers are
conducting their purchases online (Postnord, 2019). When faced with the question of whether DLT is considered an
important factor for online purchases, most... (More) - Have you ever experienced that the delivery time is too long when purchasing something online? Well, it is well in line
with theories concerning consumer behaviour and waiting time (Bitner, 1990). However, the magnitude of change in
consumer behaviour when faced with different delivery lead times (DLTs), is not as researched. We have conducted a
study at a furniture retailer in Sweden, analyzing their online demand data and how the conversion rate is affected by
changes in the offered DLT. Delivery time is something that is increasing in importance as more and more customers are
conducting their purchases online (Postnord, 2019). When faced with the question of whether DLT is considered an
important factor for online purchases, most consumers state that it is and they prefer a short DLT, as one can expect.
However, it is not as easy to establish when the DLT is considered as too long. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9008364
- author
- Josefsson, Olle LU and Hanna, Jame-Jamil LU
- supervisor
- organization
- alternative title
- Quantitative impact of change in delivery lead time within e-commerce
- course
- MIOM05 20192
- year
- 2020
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- Delivery lead time, retail, supply chain management, e-tailing, furniture, online sales, e-commerce
- report number
- 20/5638
- language
- English
- id
- 9008364
- date added to LUP
- 2020-06-24 12:28:59
- date last changed
- 2020-06-24 12:28:59
@misc{9008364,
abstract = {{Delivery lead time (DLT) is seen as one of the most important service factors
affecting the consumers willingness to fulfill a purchase within online retailing (Esperet al., 2003). The purpose of this thesis is to investigate the effect variations in the offered DLT have on customer conversion rate within e-commerce. This is done by analyzing historical online customer demand data from a case company within the furniture industry. Further, two other factors are studied in relation to DLT, delivery charge and consumer commitment. The purpose was to further understand how these factors influence consumers behaviour in relation to the offered DLT. The research questions for the study related to the Swedish market and were the following: How does delivery-lead-time affect the probability of an fulfilled order for online furniture sales? and (2). How is the sensitivity for changes in DLT affected by the factors delivery-cost and consumer commitment?.
The analysis was done using a quantitative approach of logistic regression models. The generated models displayed statistical significance and could quantify the relationship between the variables DLT and conversion rate. The overall samples showed that when offered an DLT increase from three to ten days the probability of a consumer fulfilling the purchase decreases with 10.67 %, which for the case company studied, could be translated to a potential loss of sales of 68 million SEK per year. Further, the conducted study indicate that a high consumer commitment make consumers less sensitive to changes in DLT, while delivery charge have the opposite effect. That is a high delivery charge make consumers more sensitive to longer DLT.
Historically research related to the topic of DLT has been done using surveys or interviews to study consumer preferences. This is what makes this study different as it is based on actual sales data enabling the study of consumers actual behaviour, rather than their experienced preferences. The work of this thesis contributes to the research by quantifying the relationship of DLT and conversion rate.}},
author = {{Josefsson, Olle and Hanna, Jame-Jamil}},
language = {{eng}},
note = {{Student Paper}},
title = {{The impact of delivery lead time on customer conversion}},
year = {{2020}},
}