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This study investigated what criteria online vendors use to select parcel delivery carriers and examines what bearing they have on the development and maintenance of mutually beneficial partnerships. The selection attributes are identified via the logistical transport literature and then grouped according to their influence on online vendors. Seven distinct factors pertaining to the selection of carriers were identified, the two most important of which are "on-time, tracking and quick response" and "fare rate and freight loss." Considerable interpenetration is discernible between these factors and the e-commerce business model, average monetary transaction and shipment frequency. Online transactions reply on a distribution service that ensures physical goods reach intended customers. Since service requirements fluctuate over time, selection attributes identified in previous studies are likely to be of limited utility. An expanding online market affords more distribution service opportunities, which makes it imperative that key factors affecting the selection of carriers by online vendors are amenable to empirical verification.
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According to one recent estimate, 694 million people use the Internet worldwide (http:// www.comscore.com, 12). It is quite clear that this virtual environment offers tangible benefits in many aspects of everyday lives. A ready example of such benefit is online shopping, which meets consumer demand for convenient price comparisons. With the ease of Internet usage, sellers are able to reach audiences never before thought possible. Unsurprisingly, then, most products sold in brick-and-mortar stores are now also available online. The virtual environment allows retailers to cut rent and labor costs and use the resultant savings to lower product prices. This, in combination with the convenience of search engines, is the major factor contributing to the adoption of Internet shopping.
Lower prices, convenience, and the sheer diversity of products are clearly the main competitive advantages of online shopping. The Internet has become a borderless marketplace for the exchanging of goods and services. But while Internet users like the convenience of online shopping, some do worry about the security of their financial information (Sherry 2008, 19). Sellers engaging in online transactions have to rely not only on safe and convenient electronic funds transfer (EFT) but also a delivery service to ship physical goods to customers. Some parcel delivery carriers offer a package pickup service, the delivery time designated by vendors, and a goods-to-receivables service (meaning payment is made to the delivery vehicle operator rather than by EFT). An efficient goods-to-receivables service is vital for satisfying online shoppers who do not wish to place trust in EFT.
A prosperous parcel delivery forms a successful symbiosis for the booming e-commerce sector. However, the parcels market is a highly competitive, global one. Online vendors have to prioritize the delivery of goods to customers in their advertised condition at a rate of transfer that customers deem satisfactory. In the first instance, it is in the online vendor's interest to ensure that their projected customer base will accept the convenience of receiving the chosen goods from the delivery service providers. The selection of carriers is clearly a multifaceted problem that must be resolved in a mutually beneficial manner. This article endeavours to play a constructive role in the said process by answering two interrelated questions:
1. What are the main factors that influence how online vendors select carriers?
2. Do these main factors vary with business-to-consumer (B2C) and consumer-to-consumer (C2C) vendors?
The article is structured as follows: The next section reviews and analyzes the relevant literature. Research methodology is presented, along with details of participants, research instruments, and survey procedures. Results are subsequently contextualized with in-depth statistical analysis, followed by a discussion of their implications in the concluding section.
LITERATURE REVIEW
First, the development of the current online shopping market is described. Then, the literature review outlines the service attributes that online vendors selecting carriers consider important.
Online Shopping Market
Consumer data for 2005 show that online shopping in the U.S. amounted to US$165 billion (http://www.forrester.com, 12), and in the UK to EUR$9.79 billion (Internet Business News 2006, 13). Forrester estimates that by 2010 the net worth of U.S. online shopping will be US$329 billion, representing 13 percent of total retail sales there. Globally, online shopping has become crucial to retail business, with UK-based Tesco, for example, making a reported US$1.2 billion online (Dave and Behura 2008, 5), no isolated achievement when seen that online shopping contributed to an annual worldwide average 21.3 percent of all retail sales between 2002 and 2005 (Holmes 2007, 11). Shopping by Internet has been transformational for many Americans, since it provides time-pressured consumers with new levels of convenient home shopping (Mintel 2007, 17). The Internet creates untold opportunities for both product retailers and service providers, not to mention auctioneers who create marketplaces where citizens can buy and sell and for business-to-business transactions. The largest and most successful online auction site is currently eBay, which registers approximately 5.7 million items on any one day.
In Taiwan, Yahoo!Kimo, the lead C2C auction Web site, offers 3.7 million items, 80 percent of the online auction market, followed by eBay Inc., with about 1.1 million and PChome Online, with about 0.1 million. Between 2004 and 2005, the total worth of these transactions went from US$640 million to US$1070 million. In June 2006, eBay Inc. and PChome Online formed a joint venture to leverage eBay's global experience and PChome Online's local e-commerce expertise prior to launching Ruten, a new co-branded Web site through which to expand online trading opportunities in Taiwan. The result has been an incremental growth in the volume of such transactions. Most of the C2C transactions involve physical goods that require a carrier distribution service.
The Online Shopping Process
Figure 1 demonstrates the online shopping process. A customer can buy goods by logging on to a company's Web site or to an online auction site to view pictures and descriptions of goods and make an order. For online shopping purchases, the main method of payment method is by credit card. On payment, the modem then sends the details to a financial institution and provided the customer has available funds, a transaction is approved almost instantaneously. The company must then employ an economical form of delivery to ship the sold goods, which the customer should receive within a specified time frame.
Attributes of Distribution Services
Several researchers have tried identifying factors and their relative importance to help traffic managers evaluate criteria for selecting carriers. To this end, Ding et al. (2005, 6) developed a fuzzy multi-criteria decision-making model for selecting courier service providers. The six evaluation criteria were (1) speed and reliability; (2) freight rates; (3) safety; (4) salesman factor; (5) service and convenience; and (6) carrier considerations. Based on previous studies (Baker 1984, 2; Chow and Poist 1984, 3; Lambert et al. 1993, 16; Evers et al. 1996, 10; Crum and Allen 1997, 4; Evers and Johnson 2000, 9; Kent et al. 2001, 15) pertaining to the attributes shippers deem important when purchasing a transportation service, Voss et al. (2006, 20) identified nine carrier choice criteria, namely: (1) rate charged; (2) delivery reliability; (3) carrier reputation; (4) equipment availability; (5) response; (6) billing accuracy; (7) driver quality; (8) complaint follow-up; and (9) security.
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Lambert et al.'s study (1993, 16) concluded that shippers use multiple criteria to select and evaluate less-than-truckload carriers. They also discovered that many unexploited opportunities exist for carriers to achieve a sustainable competitive advantage through service differentiation. However, because service requirements change over time, as do substantive differences between shippers, attributes that were found at one time to be the least important can very possibly acquire new status and even become crucial factors in carrier selection. Such re-evaluation can extend to attributes such as "provides weekend delivery service," "sales representative with phones," or "promotional gifts."
Jerman et al. (1978, 14) adopted components of Evans and Southard's work (1974, 8) to suggest that (1) carrier charges and privileges; (2) past carrier performance; (3) carrier image; (4) carrier flexibility in rate adjustment; (5) carrier routing capability; and (6) carrier knowledge played a formative role in the carrier selection process. Based on an examination of Jerman et al.'s study (1978, 14), Evans et al. (1990, 7) indicated that most of the literature on carrier selection does not differentiate between the carrier selection behavior of small and large firms. Traffic managers of small businesses are typically at a comparative disadvantage in purchasing motor carrier services. Since such firms usually do not employ traffic professionals, and they may lack the necessary expertise and inventory space to consolidate orders. The size of most online shippers was similar to that of small firms. Therefore, analysis of the criteria used by online shippers to select carriers is important.
Premeaux (2002, 18) conducted a 2001 versus 1991 longitudinal assessment of shipper-to-shipper perceptions, carrier-to-carrier perceptions, and shipper-to-carrier perceptions. This analysis points to the scope for improvement in the understanding carriers have of shipper needs. The shipper-to-shipper analysis revealed that, in 2001, shippers were even more concerned with information access, consistent carrier performance, solid customer relations, and the availability of desired services. The carrier-to-carrier analysis indicated that in 2001 carriers appreciated the increasing importance of such factors. According to the shipper-to-carrier analysis, basically, carriers must offer more flexible rates, provide desired services, and develop a Web-enhanced Electronic Data Interchange (EDI).
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