CHAPTER 2

LITERATURE REVIEW
 Table of Contents

Introduction:..............................................................................................................................................3
Free shipping charges and their impact:.............................................................................................3
Shipping Costs Impact on Online Customers:....................................................................................3
Limitations:................................................................................................................................................5
Summary and Critical Evaluation:..........................................................................................................5
Summary:...................................................................................................................................................5
References..................................................................................................................................................6
Introduction:
The rise in the rates of Aramex has only recently begun to work out while the petrol prices,
significant costs for shippers, are at a much lower level. It is important to keep an eye on the
increase or decrease in the prices and expect them. This is the main factor in the company’s
strategies of shipping and pricing for the upcoming year. The shipping carriers every year review
the prices and do the adjustment to the rates that change due to the increased costs of labor and
fuel. The prices for the shipment of Aramex have increased which raises the questions on the
minds of every customer that what is the reason behind this. In this part of the study, we will
discuss that how the prices of shipping have been increased into high prices in Aramex.

Free shipping charges and their impact:

Tons of the trucks are of a very high standard, reflecting a commercial, pickup truck, and factory
economy. Few trucks do nothing, which means that the companies are pulling most of the things
right now, and the space in the pallets, where the products and shipping containers are stored, are
hot goods [ CITATION Tok20 \l 1033 ] . Along the way, partly due to low purchasing wants to
qualify for free shipment, consumers start to indulge in lesser extra objects, say, a pack of razors
in a lipstick tube. They do it for free shipping, but small items that incorporate every little
product from small-size earbuds to a jar of ice cream under one ounce, covered in bubble wrap,
and after that packaged in large boxes, have results. It gives a negative impact on the broader
transport sector, the atmosphere, and customers in the long run [ CITATION Yao12 \l 1033 ].

Whether the driver pulls out a heavy machine or a light-colored box full of paper towels
purchased in bulk, the cost of the carrier, including the driver's wages, remains the same. "Some
of these carriers are just moving air," said Christoph Stehmann, president of Ecommerce and
Shipping Solutions. "If the manager only carried weight, he would have lost money," he said.
Charge for the weight of the package and the size of the look, it also calculates the width, height
of every package, has currently become the norm throughout the industry. [ CITATION Wee15 \l
1033 ]

Shipping Costs Impact on Online Customers:

As the reason shows, there comes many reasons that why the consumers do not purchase the
online products or the products through email order because the only reason is the shipping costs
that come in top of the list. There is another reason for the consumers to buy the products
through the shipment including the email order, the cost of shipping is very high. Online buying
or shipping one place to another, especially sending shipments from other far countries is more
than the product itself.

Research conducted online on the random people, 13% of them said that they do not send or buy
through e-commerce or shipping any product, because they find the products cheaper on the
local stores. Free shipping reduces the costs of online purchases, but it is also safer than free
shipping can affect purchases that are 13%. There is not any information that these very
customers can change into consumers sooner or later. Free shipping can affect the companies
like Aramex, as they get little charges for the shipment of the products [CITATION Wan \l 1033 ].

Research conducted by Alexis Partners found that “75% of consumers bought at home last year
and about one-third of those who shop online at least once a month.” This group of the home
buyers, 95% of them said that high shipping cost affects the decision of buying products, 64%
said this greatly affect their order choices also. 31% of them said that high shipping costs also
affected their decisions of order. Based on these results, it can be seen that the costs of shipping
do play a major role in the buying behaviors of online shopping. It can be seen that how the
shipping costs affect the buying behaviors of the customers and what it can do with the online
purchasers and the postal.[ CITATION PUT21 \l 1033 ]

Research conducted by Micheal Levis on fee and marketing activities on customer retention,
customer acquisition, and the average expenditures found that the shipping costs highly influence
the rates of order incidents. The acquisition of graduated shipping costs greatly affects the total
expenditure of the company. It is analyzed in the research that the customer acquisition is
sensitive other than the order size. On the other hand, the profitability analysis suggests that the
policies of shipping that provide the incentives may outperform the promotion of free shipping
and increasing fee structure.[ CITATION Mic06 \l 1033 ]

Mehmet Gümüş Shanling Li Wonseok Oh Saibal Ray tells in their study that analyze that the
two formats of classification used by marketers in this background. In the first case, sellers bring
the buyers to a discounted price of the product and a special S&H tax (PS strategy), second,
buyers are offered free shipping in a non-binding setup where the price of the product already
contains shipping costs (ZS strategy). They begin by developing a style model of education that
demonstrates the competitiveness within these structures [ CITATION Meh13 \l 1033 ]
Although e-commerce has become a popular trading post in developed countries, it is still
considered a novelty in developing lands. Specifically, e-commerce in Saudi Arabia is at an early
stage despite growing rapidly and rapidly growing ICT market, high global Internet penetration,
strong marketing, and young people. This shows the buying behavior of the customers towards
the Aramex [ CITATION Mou13 \l 1033 ].

Limitations:
The limitation of the study is that the shipping costs increase rapidly in the Aramex and how it is
having an impact on the buying behavior of the customer whether they are online purchasers or
are having postal delivery of the products. Most of the time the customers do not buy the
products or do the delivery of their products because of the higher shipment costs. This gap has
to be fulfilled to gain customers to increase profitability.

Summary and Critical Evaluation:

The shipping costs of every medium like online purchasing or postal delivery do affect the
buying behavior of the customers. The company must keep in mind the importance of customers
and turn them into consumers in every way possible. Many reasons justify the reasons for
increased shipment costs which also include the packaging and delivery of the products. The
labor costs and fuel charges. The consumers having problems with the shipping charges can use
some strategies to reduce the shipment cost. The customers can use shipping platforms to get
discounts. There is another way for the customers to print their shipping labels, this is a way a
customer can reduce their shipping costs.

Summary:
This chapter analyzes the impact of higher shipping costs on the buying behavior of customers
through different literature and research. The company can lose its valuable customers as the
shipment costs increase, and the customers prefer buying products or services of lower cost. The
customers, in short, prefer to buy products or services at affordable cost, and many customers
especially e-commerce, influence the decision of buying through shipment.

In the next chapter, which is the methodology chapter, the evaluation of data will be done
through data collection and other mediums.
References
Almousa, M. (2013). Barriers to E-Commerce Adoption: Consumers’ Perspectives from a
Developing Country.

Larissav. Alberti-Alhtaybat, K. A.-H. (2017). A knowledge management and sharing business

model for dealing with disruption: The case of Aramex.

Levis, M. (2006). The effect of shipping fees on customer acquisition, customer retention, and
purchase quantities.

PUTNAM, J. (2021). What Impact Does Free Shipping Have on Online Retail Sales? Retrieved
from https://rejoiner.com/resources/free-shipping-online-retail-sales/

Ray, M. G. (2013). Shipping Fees or Shipping Free? A Tale of Two Price Partitioning Strategies
in Online Retailing.

Tokar, T. W. (2020). I Heart Logistics—Just Don’t Ask Me to Pay For It: Online Shopper
Behavior in Response to a Delivery Carrier Upgrade and Subsequent Shipping Charge
Increase.

Wang, J. L. (2020). I Heart Logistics—Just Don’t Ask Me to Pay For It: Online Shopper
Behavior in Response to a Delivery Carrier Upgrade and Subsequent Shipping Charge
Increase.

Wee, H. (2015). TRANSPORTATION. Retrieved from

https://www.cnbc.com/2015/01/06/higher-shipping-rates-and-the-amazon-effect.html

Yao, Y. &. (2012). Pricing for shipping services of online retailers: Analytical and empirical
approaches.