The Impact of Green Labels on Time Slot Choice and Operational Sustainability

Abstract

In this paper, we study the effectiveness of incentives on delivery service time slot choices. In particular, we focus on the use of green labels that specify time slots as environmentally friendly and that intrinsically motivate customers to choose a specific delivery time slot in lieu of price incentives based on extrinsic motivation. We argue that this is important since green labels’ intrinsic nature affects costumer choice in fundamentally different ways than price incentives. We conduct two experiments and two simulation studies to study the effects of using green labels. Our experimental findings suggest that: (i) green labels are an effective tool to steer shoppers toward a certain delivery option, (ii) green labels are more effective for people who are more eco‐conscious, (iii) green labels remain effective in the presence of price incentives, while price incentives offer little added value beyond that of just green labels, and (iv) the effectiveness of green labels vs. price discounts remains high when time slots are less appealing (i.e., longer). Our simulation findings suggest that green slots, compared to price incentives or no incentives, offer providers a way to effectively steer consumer time slot choices to yield shorter routes, fewer delivery vehicles used, and more per‐customer revenue. We thus conclude that steering individuals to select delivery time slots through intrinsic motivation via green labels may be a promising, no‐cost direction for (online) retailers and an important topic for further research.

Demand Management for Attended Home Delivery – A Literature Review

“…While the research on the standard 'next-day' e-grocery businesses is maturing, researchers have only started to study new delivery trends such as flexible delivery options and on-demand delivery by a deadline. In addition, recent studies have identified new ways to steer customer behavior, for example, by means of green labels (Agatz et al, 2021).…”

“…The discussed contributions provide valuable insight into relevant aspects of strategic demand management. Compared to the operational and tactical level, the set of research methodologies is more diverse and includes prescriptive analytics (Bruck et al, 2020;Wagner et al, 2021), simulation and scenario evaluation (Agatz et al, 2021;Boyer et al, 2009;Lin & Mahmassani, 2002;Manerba et al, 2018;Phillipson & van Kempen, 2021;Ramaekers et al, 2018;Ulmer, 2017), and game-theoretic (Belavina et al, 2017;Gümüş et al, 2013) and empirical (e.g., de Magalhães, 2021;Milioti et al, 2020) analyses. We explain this observation by the strong interdependencies of strategic demand management with other domains.…”

“…The authors determine the equilibrium market structure and validate their theoretical results through empirical analyses. In addition to traditional pricing models, Agatz et al (2021) focus on non-monetary incentives and study the impact of displaying green labels for environmentally friendly service options on customer behavior and operational performance. From their empirical experiments and simulation study, the authors verify that green labels effectively steer customer choice, also in combination with price incentives and for less attractive time windows.…”

Eco‐labeling of freight transport services: Design, evaluation, and research directions

“…In this context, an open question is what new business models could emerge from the introduction of such labels and how companies incorporate eco-labeling when negotiating with business partners or in pricing decisions for their products and services. For instance, Agatz et al (2021) analyze the interactions between price and eco-labeling incentives for time slot selection in a home delivery service. They conclude from experiments and simulations that eco-labels are more effective than price incentives in fostering more sustainable customer decisions.…”

“…For instance, Agatz et al. (2021) analyze the interactions between price and eco‐labeling incentives for time slot selection in a home delivery service. They conclude from experiments and simulations that eco‐labels are more effective than price incentives in fostering more sustainable customer decisions.…”