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

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