This paper analyzes customer product-choice behavior based on the recency and frequency of each customer's page views on e-commerce sites. Recently, we devised an optimization model for estimating product-choice probabilities that satisfy monotonicity, convexity, and concavity constraints with respect to recency and frequency. This shape-restricted model delivered high predictive performance even when there were few training samples. However, typical e-commerce sites deal in many different varieties of products, so the predictive performance of the model can be further improved by integration of such product heterogeneity. For this purpose, we develop a novel latent-class shape-restricted model for estimating product-choice probabilities for each latent class of products. We also give a tailored expectation-maximization algorithm for parameter estimation. Computational results demonstrate that higher predictive performance is achieved with our latent-class model than with the previous shape-restricted model and common latent-class logistic regression.
One of the most active areas of clickstream research has been the analysis of online purchasing behavior of customers on e-commerce sites @cite_15 . Moe and Fader @cite_8 proposed a stochastic model for predicting online purchasing conversion rates based on an observed history of visits and purchases. Many other studies used logit and or probit modeling based on various types of explanatory variables to predict online purchasing behavior @cite_21 @cite_17 @cite_27 @cite_40 @cite_10 , whereas @cite_38 applied several classification algorithms to predict customers' buying intentions. However, these studies focused on predicting customer visits that culminated in purchases, and so they did not assign a purchase probability to each product. Although various studies have analyzed online product-choice behavior, most have emphasized more detailed data (e.g., multiplex data @cite_32 , social media profiles @cite_42 , and product reviews and ratings @cite_11 ) rather than clickstream data. In contrast to these studies, the present paper focuses on investigating the relationship between customer PVs and product-choice probabilities based on clickstream data. Our research will be of significant value to most e-commerce sites, for which the analysis of clickstream data is a major challenge.
@cite_38 @cite_11 @cite_8 @cite_21 @cite_42 @cite_32 @cite_27 @cite_40 @cite_15 @cite_10 @cite_17
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This empirical study investigates the contribution of different types of predictors to the purchasing behaviour at an online store. We use logit modelling to predict whether or not a purchase is made during the next visit to the website using both forward and backward variable-selection techniques, as well as Furnival and Wilson’s global score search algorithm to find the best subset of predictors. We contribute to the literature by using variables from four different categories in predicting online-purchasing behaviour: (1) general clickstream behaviour at the level of the visit, (2) more detailed clickstream information, (3) customer demographics, and (4) historical purchase behaviour. The results show that predictors from all four categories are retained in the final (best subset) solution indicating that clickstream behaviour is important when determining the tendency to buy. We clearly indicate the contribution in predictive power of variables that were never used before in online purchasing studies. Detailed clickstream variables are the most important ones in classifying customers according to their online purchase behaviour. In doing so, we are able to highlight the advantage of e-commerce retailers of being able to capture an elaborate list of customer information. Abstract The authors develop and estimate a model of online buying using clickstream data from a Web site that sells cars. The model predicts online buying by linking the purchase decision to what visitors do and to what they are exposed to while at the site. To overcome the challenges of predicting Internet buying, the authors decompose the purchase process into the completion of sequential nominal user tasks and account for heterogeneity across visitors at the county level. Using a sequence of binary probits, the authors model the visitor’s decision of whether to complete each task for the first time, given that the visitor has completed the previous tasks at least once. The results indicate that visitors’ browsing experiences and navigational behavior predict task completion for all decision levels. The results also indicate that the number of repeat visits per se is not diagnostic of buying propensity and that a site’s offering of sophisticated decision aids does not guarantee increased conversion rat... Clickstream data provide information about the sequence of pages or the path viewed by users as they navigate a website. We show how path information can be categorized and modeled using a dynamic multinomial probit model of Web browsing. We estimate this model using data from a major online bookseller. Our results show that the memory component of the model is crucial in accurately predicting a path. In comparison, traditional multinomial probit and first-order Markov models predict paths poorly. These results suggest that paths may reflect a user's goals, which could be helpful in predicting future movements at a website. One potential application of our model is to predict purchase conversion. We find that after only six viewings purchasers can be predicted with more than 40 accuracy, which is much better than the benchmark 7 purchase conversion prediction rate made without path information. This technique could be used to personalize Web designs and product offerings based upon a user's path. Abstract Using the clickstream data recorded in Web server log files, the authors develop and estimate a model of the browsing behavior of visitors to a Web site. Two basic aspects of browsing behavior are examined: (1) the visitor’s decisions to continue browsing (by submitting an additional page request) or to exit the site and (2) the length of time spent viewing each page. The authors propose a type II tobit model that captures both aspects of browsing behavior and handles the limitations of server log-file data. The authors fit the model to the individual-level browsing decisions of a random sample of 5000 visitors to the Web site of an Internet automotive company. Empirical results show that visitors’ propensity to continue browsing changes dynamically as a function of the depth of a given site visit and the number of repeat visits to the site. The dynamics are consistent both with “within-site lock-in” or site “stickiness” and with learning that carries over repeat visits. In particular, repeat vis...