Cross-Border Electronic Commerce: Distance Effects and Express Delivery in European Union Markets

ABSTRACT This empirical study examines distance effects on cross-border electronic commerce and in particular the importance of express delivery in reducing the time dimension of distance. E-commerce provides suppliers with a range of opportunities to reduce distance as perceived by online buyers. They can reduce psychological barriers to cross-border demand by designing websites that simplify the search for and comparison of products and suppliers across countries. They can reduce cost barriers by applying pricing strategies that redistribute transportation costs, and they can overcome time barriers offering express delivery services. This study of 721 regions in five countries of the European Union shows that distance is not “dead” in e-commerce, that express delivery reduces distance for cross-border demand, and that e-demand delivered by express services is more time sensitive and less price sensitive than e-demand satisfied by standard delivery. The willingness of e-customers to pay for express services is shown to be affected by income and by the relative lead-time benefits and express charges. Furthermore, the adoption of express delivery is positively associated with e-loyalty in terms of repurchase rates. The results confirm the importance for e-suppliers of cleverly designed delivery services to reduce distance in order to attract online customers across borders.

[1]  Insu Park,et al.  Assurance Seals, On-Line Customer Satisfaction, and Repurchase Intention , 2010, Int. J. Electron. Commer..

[2]  Rocco Huang,et al.  Distance and Trade: Disentangling unfamiliarity effects and transport cost effects , 2006 .

[3]  Ali Hortaçsu,et al.  The Geography of Trade in Online Transactions: Evidence from eBay and MercadoLibre , 2009 .

[4]  Geomina Turlea,et al.  The drivers and impediments for cross-border e-commerce in the EU , 2014, Inf. Econ. Policy.

[5]  John Mccallum,et al.  National Borders Matter: Canada-U.S. Regional Trade Patterns , 1995 .

[6]  Kevin Crowston,et al.  Customer Satisfaction with Electronic Service Encounters , 2006, AMCIS.

[7]  V. Zeithaml.  Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence: , 1988 .

[8]  Varun Grover,et al.  The Relationship of E-Commerce Competence to Customer Value and Firm Performance: An Empirical Investigation , 2005, J. Manag. Inf. Syst..

[9]  Don E. Schultz,et al.  The Death of Distance ‐ How the Communications Revolution will Change Our Lives , 1998 .

[10]  Chun-Yao Huang,et al.  Excess Loyalty in Online Retailing , 2011, Int. J. Electron. Commer..

[11]  Dennis F. Galletta,et al.  Consumer Perceptions and Willingness to Pay for Intrinsically Motivated Online Content , 2006, J. Manag. Inf. Syst..

[12]  Mahmut Parlar,et al.  Online retailers' promotional pricing, free-shipping threshold, and inventory decisions: A simulation-based analysis , 2013, Eur. J. Oper. Res..

[13]  V. Zeithaml.  Service excellence in electronic channels , 2002 .

[14]  F. E..  Principles of Economics , 1890, Nature.

[15]  Raphaëlle Ducret,et al.  Parcel deliveries and urban logistics: Changes and challenges in the courier express and parcel sector in Europe — The French case , 2014 .

[16]  Aura Reggiani,et al.  Freight Transport and the Value of Travel Time Savings: A Meta‐analysis of Empirical Studies , 2007 .

[17]  W. Jevons.  Theory of Political Economy , 1965 .

[18]  T. Mayer,et al.  Gravity Equations: Workhorse, Toolkit, and Cookbook , 2013 .

[19]  Jérôme Massiani,et al.  A micro founded approach to the valuation of benefits of freight travel time savings , 2014 .

[20]  Mo Adam Mahmood,et al.  On-line Shopping Behavior: Cross-Country Empirical Research , 2004, Int. J. Electron. Commer..

[21]  C. Granger.  Investigating causal relations by econometric models and cross-spectral methods , 1969 .

[22]  T. Breurch,et al.  A simple test for heteroscedasticity and random coefficient variation (econometrica vol 47 , 1979 .

[23]  Yezheng Liu,et al.  Optimizing shipping-fee schedules to maximize e-tailer profits , 2013 .

[24]  Oliver Hinz,et al.  Retailers' Use of Shipping Cost Strategies: Free Shipping or Partitioned Prices? , 2012, Int. J. Electron. Commer..

[25]  F. Y. Edgeworth.  Mathematical Psychics: An Essay on the Application of Mathematics to the Moral Sciences , 2007 .

[26]  Alok Gupta,et al.  An Empirical Study of Consumer Switching from Traditional to Electronic Channels: A Purchase-Decision Process Perspective , 2004, Int. J. Electron. Commer..

[27]  C. Sims.  Money, Income, and Causality , 1972 .

[28]  Peniti Pöyhönen,et al.  A Tentative Model for the Volume of Trade between Countries , 2016 .

[29]  V. Yilmaz,et al.  Extending the Technology Acceptance Model for Adoption of E-Shopping by Consumers in Turkey , 2011 .

[30]  R. Feenstra.  Advanced international trade : theory and evidence , 2004 .

[31]  H. Gossen.  The Laws of Human Relations and the Rules of Human Action Derived Therefrom , 1983 .

[32]  H. White.  A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity , 1980 .

[33]  Avi Goldfarb,et al.  Does the Internet Defy the Law of Gravity? , 2006 .

[34]  Frances Cairncross.  The death of distance : how the communications revolution will change our lives , 1997 .

[35]  Vladimir Zwass,et al.  Electronic Commerce: Structures and Issues , 1996, Int. J. Electron. Commer..

[36]  Alemayehu Molla,et al.  eCommerce adoption in developing countries: a model and instrument , 2005, Inf. Manag..

[37]  James E. Anderson,et al.  Gravity with Gravitas: A Solution to the Border Puzzle , 2001 .

[38]  K. Head,et al.  The Puzzling Persistence of the Distance Effect on Bilateral Trade , 2004, The Review of Economics and Statistics.

[39]  Marcelo Olarreaga,et al.  There Goes Gravity: eBay and the Death of Distance , 2016 .

[40]  Edward E. Leamer,et al.  A Flat World, a Level Playing Field, a Small World After All, or None of the Above? A Review of Thomas L Friedman's The World is Flat , 2007 .

[41]  H. Wolf,et al.  Intranational Home Bias in Trade , 2000, Review of Economics and Statistics.

[42]  Glenn B. Voss,et al.  The Roles of Price, Performance, and Expectations in Determining Satisfaction in Service Exchanges , 1998 .

[43]  J. Sempsey.  The death of distance: How the communications revolution will change our lives , 1998 .

[44]  R. Rust,et al.  Service Quality: Insights and Managerial Implications from the Frontier , 1994 .

[45]  I. Ajzen,et al.  Prediction of goal directed behaviour: Attitudes, intentions and perceived behavioural control , 1986 .

[46]  G. Haines,et al.  The Theory of Buyer Behavior. , 1970 .

[47]  Glenn B. Voss,et al.  The Roles of Price, Performance, and Expectations in Determining Satisfaction in Service Exchanges: , 1998 .

[48]  James E. Anderson.  A Theoretical Foundation for the Gravity Equation , 1979 .

[49]  Robert J. Kauffman,et al.  A growth theory perspective on B2C e-commerce growth in Europe: An exploratory study , 2007, Electron. Commer. Res. Appl..

[50]  Karim Alrawi.  The internet and international marketing , 2007 .

[51]  Matthias Helble,et al.  Border Effect Estimates for France and Germany Combining International Trade and Intranational Transport Flows , 2007 .

[52]  J. Tinbergen.  Shaping the World Economy: Suggestions for an International Economic Policy , 1964 .

[53]  J. J. Cronin,et al.  Assessing the effects of quality, value, and customer satisfaction on consumer behavioral intentions in service environments , 2000 .

[54]  Wonseok Oh,et al.  Shipping Fees or Shipping Free? A Tale of Two Price Partitioning Strategies in Online Retailing , 2010 .

[55]  F Y Edgeworth,et al.  An Essay on the Application of Mathematics to the Moral Sciences Barribtee-at-law , .

[56]  Joan V. Robinson,et al.  The Nature of the Firm , 2004 .

[57]  Rolph E. Anderson,et al.  Customer loyalty in e-commerce: an exploration of its antecedents and consequences , 2002 .

[58]  Michael Lewis.  The effect of shipping fees on customer acquisition, customer retention, and purchase quantities , 2006 .

[59]  Hermann Heinrich Gossen.  Gossen, Hermann Heinrich: Entwickelung der Gesetze des menschlichen Verkehrs, und der daraus fließenden Regeln für menschliches Handeln , 2019, Die 100 wichtigsten Werke der Ökonomie.

[60]  Timothy M. Laseter,et al.  Physical distribution service performance and Internet retailer margins: The drop-shipping context , 2008 .