On the platform but will they buy? Predicting customers' purchase behavior using deep learning

Abstract

A thorough understanding of online customer's purchase behavior will directly boost e-commerce business performance. Existing studies have overtly focused on purchase intention and used sales rank as a natural proxy, which however has limited business application. Additionally, intention to purchase does not necessarily convert to actual retail purchases. We aim to further our understanding of online customer's purchase behavior for an e-commerce platform by predicting the same using deep learning techniques, on a large multidimensional data sample of more than 50,000 unique web sessions. This study used two distinct sets of variables, i.e., platform engagement and customer characteristics, as key predictors of online purchases by retail customers. We further compared the predictive capability of our deep learning method with other widely used machine learning techniques for prediction, including Decision Tree, Random Forest, Support Vector Machines, and Artificial Neural Networks. We found that the deep learning technique outperformed the machine learning techniques when applied to the same dataset. These analyses will help platform designers plan for more platform engagements while simultaneously expanding the academic understanding of purchase prediction for online e-commerce platforms.