The Out-of-Stock (OOS) Effect on Choice Shares of Available Options

https://doi.org/10.1016/j.jretai.2015.07.001Get rights and content

Highlights

  • Out-of-stock is informative about the desirability of product features.

  • Consumers’ choices shift toward options that share features with the OOS option.

  • The effect only occurs among non-experts and when the OOS is driven by demand.

  • The informational value of OOS is affected by others’ expertise and shopping goals.

Abstract

Prior research on product out-of-stock (OOS) has mainly focused on the consequences of OOS due to consumers not being able to select their target options. The present research explores how OOS noticed by consumers without a specific target option in mind affects their preference among the in-stock options. We find that consumers can draw social inferences from OOS about the desirability of product features. Consequently, in-stock options that share feature with the OOS option enjoys choice advantage. We show that this effect occurs only when the OOS condition is caused by consumer demand (as opposed to by logistical causes), and only for consumers who are not product category experts. Further, consumers’ belief on others’ expertise and shopping goal determines which specific feature they will identify as the key feature that drives the OOS. These findings provide a more complete picture for how consumers respond to OOS. They also offer insights into making more accurate demand estimation and suggest a potential new tool for in-store marketing.

Section snippets

The Impact of OOS

A consumer may notice a certain option OOS either after s/he has decided to choose that option (e.g., during transaction), or before any preference has been formed (e.g., during information search). Previous research has mostly focused on the former situation, and suggested that consumers who find their desired option OOS will defer purchase, cancel the order, or switch stores (Anderson et al., 2006, Fitzsimons, 2000). Further, if consumers decide to choose an in-stock option as a substitute,

Hypothesis

To introduce our hypotheses, we first describe the common settings of our experiments and the symbols we will use throughout the rest of this paper. We study how the OOS of a certain option impacts consumers’ preferences among other in-stock options. In all of our experiments, each option is defined on two attributes relevant to a consumer's decision. Each attribute varies between two levels of value, referred to as features. We use A and B to denote the two features on attribute 1, and X and Y

Method

The purpose of study 1 is to test H1a, the OOS effect, and H1b, the mediating role of feature evaluation.

Three hundred and sixty-six participants from Amazon Mechanical Turk participated in this study in exchange for five cents. Participants were asked to choose among four laundry detergents. The options differed from each other in form (powder vs. liquid) and scent (Bella Flora vs. Ocean Pearl). Participants were randomly assigned into one of the three conditions: baseline, OOS, and absence.

Study 2

The OOS effect occurs because, by default, OOS is considered to be a result of others’ preference for the OOS option. Accordingly, OOS should be uninformative about the option if it is caused by factors irrelevant to its desirability, for example, a warehouse burning down in an accidental fire or the supplier quitting the market in response to new regulations. In other words, the OOS effect should be eliminated if judges are aware that the OOS is not caused by others’ preference for the

Methods

The purpose of study 3 is to test H2, the moderating role of domain knowledge on the OOS effect.

The study was conducted in China. We built a kitchen accessory store on taobao.com, a major Chinese online shopping platform. We listed four models of cutting boards in our store. The models differed in their material – made in wood versus bamboo, and their shape – square versus round. We then uploaded pictures as well as product descriptions of the cutting boards consulting other stores that were

Method

In study 4, we test H3, namely, how a judge's belief about the expertise of others affects their choice between AY and BX.

One hundred and sixty-two participants from Amazon Mechanical Turk participated in this study in exchange for 10 cents. They were asked to imagine that, on a vacation trip, they stayed in a hotel that offered each guest a wine-and-cheese basket as a check-in gift. All participants were presented a list of three options (Appendix 4): Banylus wine + Vacherin Cheese (AX), Banylus

Study 5

In study 5, we examine the external validity of the OOS effect by running a field experiment at a restaurant. In addition, we explore another determinant of judges’ choice between AY and BX, namely, others’ consumption goal (H4). We provide restaurant diners with lunch options (combos of food and drink), and manipulate one option to be OOS. Considering that the experiment was conducted in a restaurant during lunch time, others’ main consumption goal is likely to be having good food rather than

General Discussion

In this paper, we conceptualize and demonstrate how OOS impacts consumers who are considering the product category without a specific target option in mind. We find that OOS shifts the preferences of these consumers to the options that share features with the OOS option. Consequently, choice shares of in-stock option are systematically affected by the OOS option.

This effect is different from the “switching” behavior documented in prior research in two ways. First, we study decisions of

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  • Cited by (0)

    This research is supported by National Nature Science Foundation of China (71102037 and 71472084). The authors are indebted to the editor for the valuable comments throughout the review process. The authors would also like to thank Rajeev Batra, Amitav Chakravarti, Fred Feinberg, and Ye Li for helpful comments and suggestions.

    1

    These authors contributed equally to the paper, and are listed in alphabetical order.

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