The impact of the number of alternatives on online consumer choice

Abstract

There are some differences between online and offline shopping. From the consumer perspective, in the online shopping, the searching cost is much lower and it is easy to find the item that has not been known before because of the recommendation system. From the seller perspective, the marginal cost of displaying additional product is extremely decreasing. These factors enable online sellers to provide much more alternatives than offline. In contrast to this phenomenon, it is also possible to offer just a single option. In the online, the customer base is not limited by the location. This research is trying to find the consumer behavior under these various alternatives conditions.

In the first part of the research, we investigated the consumer attention allocation mechanism in the online shopping through the eye-tracking device. Based on this research, consumers selected the limited number of alternatives that they gave their attention and the location was the main factor that determines the attention allocation mechanism. The top position (when the alternatives are listed vertically) and the left-centerfield position (when the alternatives are listed horizontally) are better than any other locations to get more attention from consumers. Attention decays as far from this position exponentially. We called this phenomenon as ‘attention decay effect’. Also, even though the alternative format and product is exactly same as before, just categorization could increase the total attention from consumers. We called this phenomenon as ‘attention renewal effect’. These results could be applied to the product displaying strategy in the online shopping and advertisement pricing strategy.

In the second part of the research, we investigated the conditions that offering just a single option is better. Based on this research, offering just a single option is powerful when the product has hedonic characteristics. Also individual factors such as maximizing tendency, and situa...