Fast or free shipping options in online and Omni-channel retail? The mediating role of uncertainty on satisfaction and purchase intentions

Purpose The purpose of this paper is to investigate the effect of a dimension of logistics service quality (delivery time) interacting with shipping charges and purchase importance on customer satisfaction and purchase intentions in an e-commerce context. Uncertainty in terms of perceived ambiguity and perceived riskiness is shown to be the theoretical mechanism that plays a mediating role in the relationships between delivery time and customer satisfaction, as well as between delivery time and purchase intentions. Design/methodology/approach This study used a scenario-based role playing experiment. Three variables are manipulated in the design of the study – delivery time, shipping charges, and purchase importance. Participant responses ( n =360) were collected through Amazon Mechanical Turk with perceptual measures. Findings Results indicated that increased delivery time significantly increased customers’ perceived ambiguity and perceived riskiness which reduced satisfaction as well as negatively impacted purchase intentions. Further, free shipping reduced customers’ perceived ambiguity when delivery time was lengthy, but strengthened the perception of ambiguity when the delivery time was short. Originality/value This paper sheds light on how a dimension of logistics service quality (delivery time) interacts with shipping charges and purchase importance to impact customer satisfaction and purchase intentions. It introduces uncertainty in the form of perceived ambiguity and perceived riskiness, to the logistics service literature as the mechanism that can explain how delivery time interacting with shipping charges and purchase importance impact customer satisfaction and purchase intentions. The implications for online retailers are that they should display separate shipping charges for shorter delivery times but for longer delivery times they should display a total price for the product which includes the shipping cost. Also when the purchase is important to the customer, they should offer shorter shipping time choices if they want to increase customer satisfaction.