Opportunities for active stock-out management in online stores: The impact of the stock-out policy on online stock-out reactions
AbstractThis paper investigates the impact of an online retailer’s stock-out policy on purchase incidence and choice. We make a distinction between three policies: (1) stock-outs are immediately visible and there are no suggestions, (2) stock-outs are only visible after clicking and (3) a replacement item is suggested for each stock-out product. Results from an extensive and realistic online grocery shopping experiment reveal that the adopted stock-out policy has a significant impact on both decisions. First, making stock-outs not immediately visible creates confusion and intensifies the consumer’s loss experience, thereby reducing the tendency to buy in the category. Second, while suggesting a replacement item normally leads to a substantial increase in the item’s choice probability, this effect is canceled out when higher-priced – suspicious – items are suggested. Overall, these results indicate that retailers have an interest in pursuing open and convenience-oriented stock-out policies.
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Bibliographic InfoPaper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2005005.
Length: 40 pages
Date of creation: Feb 2005
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Web page: https://www.uantwerp.be/en/faculties/applied-economic-sciences/
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This paper has been announced in the following NEP Reports:
- NEP-ACC-2005-02-13 (Accounting & Auditing)
- NEP-ALL-2005-02-13 (All new papers)
- NEP-BEC-2005-02-13 (Business Economics)
- NEP-DCM-2005-02-13 (Discrete Choice Models)
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- Penn, Jerrod & Matopoulos, Aristides & House, Lisa, 2010. "Response to Out of Stock Produce and its Underlying Economic Considerations," 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida 56487, Southern Agricultural Economics Association.
- Breugelmans, Els & Campo, Katia, 2008. "Can in-store displays improve category sales and brand market share in online stores? A study on the overall effectiveness and differences between display types in an online FMCG context," Research Memorandum 035, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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