Identifying Consumer Consideration Set at the Purchase Time from Aggregate Purchase Data in Online Retailing

34 Pages Posted: 26 Oct 2011 Last revised: 19 Aug 2014

See all articles by Bin Gu

Bin Gu

Boston University - Department of Management Information Systems

Prabhudev Konana

University of Texas at Austin - Department of Information, Risk and Operations Management

Hsuan-Wei Michelle Chen

University of Connecticut - Department of Operations & Information Management

Date Written: October 23, 2011

Abstract

Online retailers provide a substantial amount of product information to their customers. The information includes not only product features and customer reviews, but also information on alternative products that may better fit a consumer’s needs. The systematic provision of information on alternative products could have a significant impact on consumers’ purchase decision process at online retailers. In this study, we analyze one aspect of the impact – the degree to which consumers consider multiple products at the purchase time. We leverage a popular feature provided by online retailers – “What Do Customers Ultimately Buy after Viewing This Item?” We show that information contained in this feature can be used to identify consumers’ product consideration set and choice at the purchase time when combined with product sales data. The identification is exact in analyzing competition between two products. For competition involving three products, the identification is exact under the assumption that consumer choice follows a discrete choice model. For competition involving more than three products, the information provides a lower bound of the percentage of consumers that consider only one product at the purchase time. We apply the model to 38,400 unique products from Amazon’s Electronics category. The results show that more than 78 percent of consumers purchase a product without considering any other products on Amazon at the purchase time.

Keywords: Consideration Set, Consumer Choice, Information Search, Electronic Commerce

Suggested Citation

Gu, Bin and Konana, Prabhudev and Chen, Hsuan-Wei Michelle, Identifying Consumer Consideration Set at the Purchase Time from Aggregate Purchase Data in Online Retailing (October 23, 2011). McCombs Research Paper Series No. IROM-08-11, Available at SSRN: https://ssrn.com/abstract=1948866 or http://dx.doi.org/10.2139/ssrn.1948866

Bin Gu (Contact Author)

Boston University - Department of Management Information Systems ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Prabhudev Konana

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

CBA 5.202
Austin, TX 78712
United States

Hsuan-Wei Michelle Chen

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
179
Abstract Views
2,048
rank
214,133
PlumX Metrics