Doctoral Student Examining Consumer Behavior Toward Out-of-Stocks in Online Shopping Environments

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Simone Peinkofer

FAYETTEVILLE, Ark. – On-shelf availability of products is a key performance measurement for retailers. But, how does product availability affect consumers? That is what Simone Peinkofer, a doctoral candidate in supply chain management, has set out to discover.

Peinkofer has been studying online shopping behavior to determine how online shoppers respond when a promoted item is out of stock. She does this by examining participants' responses to a series of hypothetical shopping scenarios with varying magnitudes of discounts on promoted items.

Her results indicate that consumers who are shopping for themselves have lower expectations of availability when a product is promoted, and those same consumers are less dissatisfied if a promoted item is out of stock than if a non-promoted item is out of stock. Furthermore, she found that consumers who are shopping for a price-discounted item that is out of stock are less likely to switch to a different retailer's website than consumers shopping for a non-price discounted item.

"Normally, people may think that a stockout of a promoted item might be more severe, that people might be more dissatisfied, but we actually found the opposite," Peinkofer said.

Peinkofer said understanding consumer behavior related to product availability is critical because of its far-reaching effects on a variety of stakeholders.

"If a product is out of stock it could result in the retailer or the supplier losing a sale, so it's important to know how the consumer reacts to a product being unavailable," she said.

The findings of the study could prove beneficial for retailers and influence how retail managers control inventory. The context in which a consumer arrives at a store is an important consideration for retailers as well, as a customer's satisfaction level regarding an out of stock item may depend on the intended recipient of the product.

"With big data and predictive analytics, retailers have the opportunity to identify different consumer segments," Peinkofer said. "Retail managers could adjust their inventory management strategy accordingly."

The third-year doctoral student admitted her research, which earned her the runner up slot in the business and supply chain management category at the 2014 "From Abstract to Contract: Graduate Student Research Poster Competition," has affected the way she shops. For example, she now specifically pays attention to product unavailability during her shopping trips.

Peinkofer has been assisted in her research by her advisor Terry Esper, associate professor of supply chain management and executive director of the Supply Chain Management Center. Additionally, she has received support from Ronn Smith, associate professor of marketing and Brent Williams, assistant professor of supply chain management. She is slated to complete her doctoral degree in spring 2016.