“Free shipping” or “dollar off”? The moderating effects of list price and e-shopping experience on consumer preference for online discount

Abstract

The use of online shopping has grown exponentially over the last decade. Although traditional and internet shopping behaviors are similar in some ways, there are some significant differences. To this end, this paper investigates the role of different types of pricing discounts in shaping consumer evaluations when shopping online. In particular, we examine the moderating effects of the list price value and online shopping experience on the consumer evaluation of “free shipping” and “dollar off” discounts. Past research suggests that the free shipping offer will be more attractive than the dollar-off offer when they are of the same economic value. This study contributes to our understanding of research by examining the moderating effects of changes in list price and the consumers' online shopping experience. The results of the quasi-experimental design suggests that the free shipping offer works better than a dollar-off discount for lower-priced goods, but there is no difference between the two for higher-priced goods. Additionally, seasoned online shoppers are more receptive to both types of pricing discounts, no matter the list price, than are novice online shoppers.