Exploring Price Elasticity to Optimize Posted Prices in e-Commerce

Research output: Contributions to collected editions/worksArticle in conference proceedingsResearchpeer-review

Authors

Price dispersion in the Internet has attracted attention from practitioners and academics alike, since it enables companies to adjust prices to a level appropriate to their strategy. This paper demonstrates how Internet retailers can optimize short-term profitability by determining the price elasticity of demand based on empirical price tests. For this purpose visitors of an Internet retailer are divided into subgroups of approximately same size and identical characteristics. Using A-B tests 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. A field study carried out with a large Internet retailer is presented and shows that the company was able to optimize the analyzed price component and thus increase the contribution margin per visitor by about 7%. We conclude that the discussed method could be applied to answer further research questions such as the temporal behavior of demand curves.
Original languageEnglish
Title of host publicatione-Business and Telecommunications
EditorsMohammad S. Obaidat, Joaquim Filipe
Number of pages11
Place of PublicationBerlin, Heidelberg
PublisherSpringer Verlag
Publication date2011
Pages71-81
ISBN (print)978-3-642-20076-2
ISBN (electronic)978-3-642-20077-9
DOIs
Publication statusPublished - 2011
Event6th International Joint Conference on e-Business and Telecommunications - 2009 - Milan, Italy
Duration: 07.07.200910.07.2009
Conference number: 6
http://www.icete.org/ICETE2009/Keynote_Speakers.asp

    Research areas

  • Informatics - Conversion rates, Demand curves, Field studies, Internet retailers, Price dispersion, Price elasticity, Price-elasticity of demand, Research questions, Temporal behavior, Price Discrimination, Contribution Margin

Recently viewed

Activities

  1. Transdisciplinary Evaluation of Alternative Adaptation Strategies Value-Tree Method as a Tool to Integrate Multiple Values of Science, Practice and the General Public into Decision-Making
  2. Draw the line? How boundary creation behaviors at the end of work relate to recovery and next-day work performance
  3. LC-MS identification of the photo-transformation products of desipramine with studying the effect of different environmental variables on the kinetics of their formation
  4. Perception of Space and Time in a Created Environment
  5. Meta analysis as a strategy of evidence-based participation research: The example of the project ‘EDGE’
  6. Conference Analyzing Panel and Spatial Data - 2015
  7. The view of the young generation on (E)SD in Germany
  8. Session "The technological cause of entropy"
  9. Optimization of solid phase extraction of Beta-blockers from hospital effluent by Response Surface Methodology
  10. Trajectories optimisation for electrical vehicles driven by a three-phase synchronous motor
  11. Collective Decisions
  12. Career Activities in Retirement: Theory of Planned Behavior and Social Cognitive Career Theory
  13. Spektral-Kinetische Simulation der Planaren Multipol- Resonanz-Sonde
  14. Dimo Dimov
  15. Exit from the Valley. ‘Survival of the Richest’
  16. 2016 Energy Policy for Bridging and Communications Forum
  17. Gamification
  18. Music Collectives in Vienna’s Jazz Scene: Organizing and Perceiving Copresence to Make Music and Navigate Uncertainty
  19. The Impossibility of Mapping (Urban Asia)
  20. Wer oder was macht mich zur Persönlichkeit?
  21. Effects of an online- and video-based learning environment on pre-service teachers’ self-efficacy beliefs, attitudes towards inclusion and knowledge of inclusive education during practical school experiences
  22. Expressivity in Lessing, Wittgenstein and Adorno
  23. Leuphana Universität Lüneburg (Organisation)
  24. Contrastive Pragmatics: A Cross-Disciplinary Journal (Zeitschrift)
  25. Master Social Management (Organisation)

Publications

  1. A simple nonlinear PD control for faster and high-precision positioning of servomechanisms with actuator saturation
  2. Learning how to request using textbooks
  3. A Hermeneutic Interpretation of Concepts in a Cooperative Multicultural Working Project
  4. Analyzing the Influence of Knowledge Graph Information on Relation Extraction
  5. Reducing the peaking phenomenon in Luenberger observers in presence of quasi-static disturbances for linear time invariant systems
  6. I&EC 18-Small particle size magnesium in one-pot Grignard-Zerewitinoff reactions: Kinetics of and practical application to reductive dechlorination of persistent organic pollutants
  7. HR practices and ambidexterity in small- and medium-sized consulting firms: An exploratory multi-case study
  8. An Overview of Electro Hydraulic Full Variable Valve Train Systems to Reduce Emissions in Internal Combustion Engines
  9. Equivalence unbalanced-metaphor, case, and example-from Aristotle to Derrida
  10. Learning Analytics
  11. Predicting online user behavior based on Real-Time Advertising Data
  12. Comparison of Supervised versus Self-Administered Stretching on Bench Press Maximal Strength and Force Development
  13. Automatic Imitation of Multiple Agents
  14. Innovative teaching of mathematics in German secondary schools
  15. Load, Release and Fire
  16. Tree diversity promotes predator but not omnivore ants in a subtropical Chinese forest
  17. Devianzmanagement
  18. Emerging order in movement
  19. 43. Decoding Spontaneous Thoughts From Brain Resting-State fMRI: Toward Understanding Rumination
  20. An interpretive perspective on co-production in supporting refugee families’ access to childcare in Germany
  21. Complexity as experience
  22. Influence of three different balance shoes on EMG-activity during walking
  23. Jetzt die Krise nutzen
  24. Exports, R&D and Productivity: A test of the Bustos-model with German enterprise data