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Impact of demographic factors on online purchase frequency — A decision tree approach

Online shopping in India is growing by leaps and bounds. Improved infrastructure, internet speed and increasing computer literacy are working as an impetus to online shopping. Many firms are entering into this space and making competition intense. Large sharks of the online shopping ocean like Amazon, Flipkart, snapdeal etc., are finding it difficult to deal with the dynamic nature of today's consumer. They are offering huge discounts to the customers, but only offering huge discounts will do no good to retain the customer. As in present era customer is the center of every business, so every organization is striving to gain insights into customer behavior. The most difficult task for online retailers is not to acquire a customer, but to retain the customer. Previous research has advocated the contribution of customers' demographic information in providing insights into online customer behavior. The main aim of this study is to know how demographics impact online purchase frequency. Very little literature is available on studying purchase frequency from a demographic perspective. Using demographic information new customers can be classified into three categories, namely; infrequent shoppers, frequent shoppers and less frequent shoppers. The category “infrequent shoppers” is comprised of consumers who made three purchases or less in the last 6 months, while the category “frequent shoppers” consists of consumers who made 7 or more purchases in the same period, less frequent shoppers who made 4-6 purchases in last six months. Decision Trees a relatively new technique in this field is used to classify respondents into above mentioned categories. Many a times a new customer is a prospective frequent customer but lack of interest on the part of organization forces the customer to move to a competitor. Much attention needs to be paid to a prospective frequent customer. This study helps in predicting which customer is most likely to purchase frequently on the basis of demographic factors.