Operations Research Seminar: Victor Martinez de Albeniz

Using Early Click Information in Online Flash Sales Campaigns

Victor MARTINEZ de ALBENIZ, IESE Business School

Flash sales retailers organize online campaigns where products are sold for a short period of time at a deep discount. The demand in these events is very uncertain, but clickstream data provides very detailed information about the shopping process. We build a model for shoppers' sequential decisions about visiting a campaign, obtaining product information and placing a purchase, which we validate using a large data set from a leading flash sales firm. We find that life-cycle dynamics and heterogeneity across campaigns and products are the main sources of variation, and that the main uncertainty occurs in the transition between considering a product and purchasing it. Our forecasting model allows flash sales retailers to learn about the performance new products in a few hours. We use this information to update prices so as to better match supply and forecasted demand and increase profits.