Cost Beats Convenience: Analyzing Consumer Preferences in Shipping and Return Policies

Designing shipping and return policies is a key challenge for e-commerce retailers, requiring a balance between customer satisfaction, operational costs, and sustainability. This study examines how consumers evaluate and prioritize individual policy components using a Best-Worst Scaling (BWS) experiment. Based on survey data from 453 online shoppers, we analyze preferences for seven shipping and return policy components, including free shipping, free returns, sustainability, and service flexibility, complemented by Likert-scale measures and Hierarchical Bayes (HB) estimation. The findings suggest that consumers prioritize policy components that provide immediate and transparent reductions in perceived financial risk, while sustainability-related and flexibility-oriented features appear to deliver less salient utility in direct trade-off situations. The study provides actionable insights for e-retailers, suggesting that simple, cost-focused policies are more effective than complex or sustainability-driven offerings.