Measuring the Effect of Queues on Customer Purchases

41 Pages Posted: 26 May 2011 Last revised: 15 Dec 2012

Yina Lu

Columbia University - Columbia Business School

Andres Musalem

Universidad de Chile

Marcelo Olivares

Columbia University - Columbia Business School - Decision Risk and Operations; University of Chile - Engineering Department

Ariel Schilkrut

SCOPIX

Date Written: November 6, 2012

Abstract

We conduct an empirical study to analyze how waiting in queue in the context of a retail store affects customers’ purchasing behavior. Our methodology combines a novel dataset with periodic information about the queuing system (collected via video recognition technology) with point-of-sales data. We find that waiting in queue has a non-linear impact on purchase incidence and that customers appear to focus mostly on the length of the queue, without adjusting enough for the speed at which the line moves. An implication of this finding is that pooling multiple queues into a single queue may increase the length of the queue observed by customers and thereby lead to lower revenues. We also find that customers' sensitivity to waiting is heterogeneous and negatively correlated with price sensitivity, which has important implications for pricing in a multi-product category subject to congestion effects.

Keywords: queuing, service operations, retail, choice modeling, empirical research, operations/marketing interface

Suggested Citation

Lu, Yina and Musalem, Andres and Olivares, Marcelo and Schilkrut, Ariel, Measuring the Effect of Queues on Customer Purchases (November 6, 2012). Columbia Business School Research Paper No. 12/23. Available at SSRN: https://ssrn.com/abstract=1851643 or http://dx.doi.org/10.2139/ssrn.1851643

Yina Lu

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Andres Musalem

Universidad de Chile ( email )

Republica 701
Santiago
Chile

HOME PAGE: http://www.dii.uchile.cl/~amusalem

Marcelo Olivares (Contact Author)

Columbia University - Columbia Business School - Decision Risk and Operations ( email )

3022 Broadway
Uris Hall, #417
New York, NY 10027
United States

HOME PAGE: http://www.columbia.edu/~mo2338/index.htm

University of Chile - Engineering Department ( email )

Republica 701 Santiago
Chile

Ariel Schilkrut

SCOPIX ( email )

1350 Bayshore Hwy
Ste 665
Burlingame, CA 94010
United States

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