Rural Consumers’ Willingness to Pay for Online Grocery Delivery Services during COVID-19 Pandemic: Preliminary Evidence from South Africa

Abstract

This study examines the willingness of rural consumers to pay (WTP) for online grocery delivery services during COVID-19, as well as the factors affecting their WTP. To achieve this, the contingent valuation method was used to examine WTP, as it measures consumers' WTP for services without having directly used or paid for the service. Given the ordinal ranking of the WTP variable, the ordered probit model was used to examine factors affecting WTP. The descriptive findings showed that most of the rural consumers were aware of online grocery delivery services and WTP for online grocery delivery services during COVID-19. However, there were mismatches between what rural consumers prefer and the services that are offered by the food retailers. The empirical results showed younger consumers, and those with higher levels of education, higher levels of income, and larger household size are more likely to be WTP amounts higher than the premium amount. This implies that the food retailers should target high-income earning young consumers with higher levels of education and larger household sizes. Overall, the findings provide information on consumers' awareness, preferences, and WTP, which would assist the retailers in developing marketing, pricing, payment, and delivery strategies that are appropriate for the rural consumers.