Need for Speed: The Impact of In-Process Delays on Customer Behavior in Online Retail

Gallino, Santiago, Nil Karacaoglu, and Antonio Moreno. "Need for Speed: The Impact of In-Process Delays on Customer Behavior in Online Retail." Operations Research (2022).

35 Pages Posted: 31 Oct 2018 Last revised: 1 Aug 2022

See all articles by Santiago Gallino

Santiago Gallino

University of Pennsylvania - Operations, Information and Decisions Department

Nil Karacaoglu

Ohio State University (OSU) - Fisher College of Business

Antonio Moreno

Harvard University - Technology & Operations Management Unit

Date Written: December 21, 2021

Abstract

The impact of delays has been widely studied in various offline services. The focus of this study is online services and we explore the impact of in-process delays---measured by website speed---on customer behavior. We leverage novel retail and website speed data to investigate how delays impact online sales and how customer sensitivity to in-process delays varies across the different stages of a customer's shopping journey. We estimate sizable adverse effects of website slowdowns on online sales. Using threshold regression models, we show that customers exhibit diminishing sensitivity to increases in website slowdowns. Our results suggest that waiting times affect customer abandonment differently at different stages of the shopping journey. Customers are more sensitive to slowdowns at the checkout stage. Our findings have implications for website design decisions such as improving website speed at the checkout stage, selecting third-party content providers, and customizing the design of mobile and desktop channels. The paper's results are especially relevant in the current regulatory environment with ongoing policy debates about net neutrality.

Keywords: in-process delays, service operations, online retail, website speed, abandonment

JEL Classification: M1

Suggested Citation

Gallino, Santiago and Karacaoglu, Nil and Moreno, Antonio, Need for Speed: The Impact of In-Process Delays on Customer Behavior in Online Retail (December 21, 2021). Gallino, Santiago, Nil Karacaoglu, and Antonio Moreno. "Need for Speed: The Impact of In-Process Delays on Customer Behavior in Online Retail." Operations Research (2022). , Available at SSRN: https://ssrn.com/abstract=3260203 or http://dx.doi.org/10.2139/ssrn.3260203

Santiago Gallino

University of Pennsylvania - Operations, Information and Decisions Department ( email )

3730 Walnut Street
558 & 559 Jon M. Huntsman Hall
Philadelphia, PA 19104-5340
United States

Nil Karacaoglu (Contact Author)

Ohio State University (OSU) - Fisher College of Business ( email )

Antonio Moreno

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=1029325

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