Clicking through the Clickstream: A Novel Statistical Modeling Approach to Improve Information Usage of Clickstream Data by E-Commerce Entities

Abstract

Success or failure of an E-commerce platform is often reduced to its ability to maximize the conversion rate of its visitors. This is commonly regarded as the capacity to induce a purchase from a visitor. Visitors possess individual characteristics, histories, and objectives which complicate the choice of what platform features that maximize the conversion rate. Modern web technology has made clickstream data accessible allowing a complete record of a visitor’s actions on a website to be analyzed. What remains poorly constrained is what parts of the clickstream data are meaningful information and what parts are accidental for the problem of platform design. In this research, clickstream data from an online retailer was examined to demonstrate how statistical modeling can improve clickstream information usage. A conceptual model was developed that conjectured relationships between visitor and platform variables, visitors’ platform exit rate, boune rate, and decision to purchase. Several hypotheses on the nature of the clickstream relationships were posited and tested with the models. A discrete choice logit model showed that the content of a website, the history of website use, and the exit rate of pages visited had marginal effects on derived utility for the visitor. Exit rate and bounce rate were modeled as beta distributed random variables. It was found that exit rate and its variability for pages visited were associated with site content, site quality, prior visitor history on the site, and technological preferences of the visitor. Bounce rate was also found to be influenced by the same factors but was in a direction opposite to the registered hypotheses. Most findings supported that clickstream data is amenable to statistical modeling with interpretable and comprehensible models.