Website Features and Online Shopping: How Technology Usage - - PDF document
10/28/2008 Manufacturing In Transition Website Features and Online Shopping: How Technology Usage Shopping: How Technology Usage Impacts Consumer Demand Yu (Jeffrey) Hu Yu (Jeffrey) Hu Purdue University 1 10/28/2008 Overview
Introduction Research Design Empirical Results Conclusions
3
Firms invest in different technologies
Search Recommendation system etc..
Consumers gather information. Consumers utilize information that has
Expanded set of products; compare them
4
5
Using website just as an ordering
Using search with/without prior
Directed search vs. non-directed search
Responding to recommendations Responding to recommendations
Expanded consideration set Access to non-promoted products
6
Do consumers use search and
Does consumers’ usage of these
How does this impact vary across different
7
Consumer’s Purchase History
Firm’s Marketing Information Promoted Products Non- promoted
Directed Search Usage
Overall Demand Promoted Products Non- Promoted
Recommendation System Usage Non-directed Search Usage
Firm s Marketing Promotions
8
promoted Products Products
Syste Usage
Control Factor Observed Construct Unobserved Construct
A large Internet retailer of women’s
Transactions (March 2006) Server logs (March & April 2006)
52 millions lines of logs About 850,000 client requests/day
Catalog mailings “Promoted” Products
promoted in the catalog at least once rest considered “non-promoted”
9
Transactions: April 2006 Only consumers who have received all Only consumers who have received all
Purchase history as control for
Browsing and purchasing sessions Sample size: 8,199
10
11
12
Consumers who used the following technology
directed search: 26% non-directed search: 17% recommendation system: 47%
Overall (1)
* significant at 5% ** significant at 2.409** Directed Search Usage (0.414) 0.546 Non-directed Search Usage (0.874) 2.103** Recommendation System Usage (0.236) 0.001 Days Since Last Purchase (0.008) **
A consumer with 3.5% Directed Search Usage has an overall demand that is 8.4% more than that of a consumer with zero usage. Having 4.2% Recommendation System Usage instead of zero increases the
13
significant at 1% 0.049** Internet Experience (0.016) 0.959** Intercept (0.055) Log Likelihood
Sample Size 8,199
Promoted (1) Non-promoted (2) 5.325**
Directed Search Usage (0.415) (1.565) 1.353
Non-directed Search Usage (0.939) (2.234) 1.662** 3.267** Recommendation System Usage (0.268) (0.488) 0.010
Days Since Last Purchase (0.009) (0.016) ** * significant at 5% ** significant at Compared to a consumer with zero Directed Search Usage, a consumer with 3.5% usage has 18.6% more demand for promoted products and 63.0% less demand for non-promoted products. Similarly, an increase of Recommendation System Usage from zero to 4.2% increases the demand for promoted products by 7.0% and the demand for non-promoted products by 13.7%.
14
0.026 0.141** Internet Experience (0.018) (0.035) 0.683**
Intercept (0.062) (0.119) Log Likelihood
Sample Size 8,199 8,199 significant at 1%
Directed search usage
Non-directed search usage
Recommendation system usage
15
Directed search technology may
Recommendation systems mitigate the
A firm needs to consider consumers’
Customize marketing strategy. Design website properly.
16
17