Consumer Transportation Costs and the Value of E-Commerce: Evidence from the Dutch Apparel Industry
Abstract
Why do consumers value online shopping? We demonstrate that consumer transportation cost savings are at least as important to consumer welfare as their gains from variety. To estimate transportation costs, we assemble novel micro data from the Dutch retail apparel industry and complement these data with precise locations of consumers and stores. We estimate a multiple discrete choice model to characterize consumers’ choice of retailer, channel (online/offline), and purchase quantity. Our estimates imply that, in 2018, an average consumer’s welfare gain from e-commerce in the apparel category is almost €470. Consumers’ saving on transportation costs accounts for about 45% of this gain.
History: Puneet Manchanda served as the senior editor for this article.
Funding: This work was supported by the Marketing Science Institute [2018-20 Research Priorities Grant] and Dutch Research Council (NWO) [Vici Grant 453-09-004].
Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mksc.2022.1421.
