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From Amazon to Apple: Modeling Online Retail Sales, Purchase Incidence and Visit Behavior

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  • Anastasios Panagiotelis
  • Michael S. Smith
  • Peter J Danaher

Abstract

In this study we construct a multivariate stochastic model for website visit duration, page views, purchase incidence and the sale amount for online retailers. The model is constructed by composition from parametric distributions that account for consumer heterogeneity, and involves copula components. Our model is readily estimated using full maximum likelihood, allows for the strong nonlinear relationships between the sales and visit variables to be explored in detail, and can be used to construct sales predictions. We examine a number of top-ranked U.S. online retailers, and find that the visit duration and the number of pages viewed are both related to sales, but in very different ways for different products. Using Bayesian methodology we show how the model can be extended to account for latent household segments, further accounting for consumer heterogeneity. The model can also be adjusted to accommodate a more accurate analysis of online retailers like apple.com that sell products at a very limited number of price points. In a validation study across a range of different websites, we find that the purchase incidence and sales amount are both forecast more accurately using our stochastic model, when compared to regression, probit regression and a popular data-mining method.

Suggested Citation

  • Anastasios Panagiotelis & Michael S. Smith & Peter J Danaher, 2013. "From Amazon to Apple: Modeling Online Retail Sales, Purchase Incidence and Visit Behavior," Monash Econometrics and Business Statistics Working Papers 5/13, Monash University, Department of Econometrics and Business Statistics.
    • Handle: RePEc:msh:ebswps:2013-5
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    Cited by:

    1. Panagiotelis, Anastasios & Czado, Claudia & Joe, Harry & Stöber, Jakob, 2017. "Model selection for discrete regular vine copulas," Computational Statistics & Data Analysis, Elsevier, vol. 106(C), pages 138-152.
    2. Jian Huang & Qinyu Chen & Chengqing Yu, 2022. "A New Feature Based Deep Attention Sales Forecasting Model for Enterprise Sustainable Development," Sustainability, MDPI, vol. 14(19), pages 1-18, September.
    3. Junming Liu & Weiwei Chen & Jingyuan Yang & Hui Xiong & Can Chen, 2022. "Iterative Prediction-and-Optimization for E-Logistics Distribution Network Design," INFORMS Journal on Computing, INFORMS, vol. 34(2), pages 769-789, March.

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    Keywords

    Online purchasing; panel data; copulas; marketing models;
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