Optimizing price levels in e-commerce applications with respect to customer lifetime values

Publikation: Beiträge in SammelwerkenAufsätze in KonferenzbändenForschungbegutachtet

Authors

In a recent paper we have shown how Internet retailers could optimize their price levels according to their strategy. The discussed method optimizes short-term profitability by determining the exact demand curve. The method involves the application of empirical price tests. For this purpose visitors of an Internet retailer are divided in statistically identical subgroups. Using the A-B testing method different prices are shown to each subgroup and the conversion rate as a function of price is calculated. We describe the organizational requirements, the technical approach, and the statistical analysis applied to determine the price optimizing the per-order profit and the average customer lifetime value. In this paper we review the results of a field study carried out with a large Internet retailer and shows that the company was able to optimize a specific price component and thus increase the contribution margin per order by about 7%. In addition we argue that at the same time the customer lifetime value could be enhanced by 13%. We conclude that the discussed method could be applied to answer further research questions such as the temporal variation of demand curves. Copyright © 2009 ACM.
OriginalspracheEnglisch
TitelProceedings of the 11th International Conference on Electronic Commerce, ICEC 2009
HerausgeberPatrick Y. K. Chau, Kalle Lyytinen, Chih-Ping Wei
Anzahl der Seiten7
VerlagAssociation for Computing Machinery, Inc
Erscheinungsdatum12.08.2009
Seiten169-175
ISBN (Print)978-160558586-4
DOIs
PublikationsstatusErschienen - 12.08.2009
VeranstaltungACM Conference on Electronic Commerce - EC 2009 - Stanford, USA / Vereinigte Staaten
Dauer: 06.07.200910.07.2009
Konferenznummer: 10
https://dl.acm.org/doi/proceedings/10.1145/1566374

DOI

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