E-Commerce: The Choice Paradox

The Choice Paradox

Do you know, which is the most serious mistakes that an e-commerce owner can make? No! I tell you.

Offer a wide choice of products.

You think I’m crazy!

Well, then you don’t know how our mind works but, above all, you don’t know what the paradox of choice is.

The paradox of choice

In 2000, in the USA, Professor Sheena Iyengar, Professor of Management at Columbia University Business School, and Professor Mark Lepper, Professor of Psychology at Stanford University, conducted an experiment that showed that a wide selection of products in the same category while attracting the interest of more people sells less.

To validate their theory the two teachers pretended to be salesmen of a shopping center and placed a banquet on which they displayed, alternatively, 24 or 6 jars of jam of various flavors.

The experiment provided that each person who showed his interest in jams was given a coupon with a discount code to buy the desired amount of jam jars on display at the food counter.

In doing so they discovered that:

  1. The table with 24 different jams attracted more customers than the one with 6 jars of jam.
  2. On average in both cases the number of tastes was 2 tastes per person.

However, the conversion rate, that is to say the purchases actually completed by the food counter was much lower in the periods when the promotion of 24 different jam flavors was carried out in the shopping center.

The proportions were as follows:

  • The 24 packs of various flavors of jam attracted the attention of 60% of the mall’s customers.
  • The 6 jars of jam of various flavors, on the other hand, attracted the attention of 40% of customers.
  • The 24 different tastes had converted only 3% of those who had received the coupon.
  • The 6 packs of jam of various flavors, on the other hand, had converted 30% of those who had received the coupon.

The conclusions reached by the two professors based on objective data were the following: a wide range of products of the same type disorientates the potential client who prefers not to choose for fear of making a wrong choice resulting in the loss of his money.

Many psychological studies have shown that humans have a strong aversion to loss.

In many cases this type of aversion manifests itself, once they return home after purchasing a product or service, in the form of a strong sense of guilt.

It will also happen to you, once in your life, to think: “Will I have done well to buy this product?”

While in the case where you are faced with a wide choice of products the sense of guilt acts in a preventative way paralyzing the potential buyer and leading him not to buy the product.

Online sales are the paradox of choice

Over the years we at Web Marketing Company have been able to see that this type of behavior studied offline is also repeated in the field of sales through e-commerce platforms.

Very often when we explain the paradox of choice to the owners of an online store we happen to come up against a rubber wall.

They do not want to hear reasons because they are convinced that they are right because:

  • Have long experience in the sector (offline);
  • They are afraid that one of their competitors will sell that one item that they don’t have and make real money;
  • Amazon sells everything.

I tell you right away all these reasons are unfounded and show that the merchant has a precarious business model that will close it in the long run.

And I’ll explain why:

  1. We have a long experience in the field of e-commerce and all the interest in seeing our customer make profits and not turnover (they are two distinct things);
  2. To emerge your e-commerce platform must be differentiated from that of your competitors and have more of everything, even if only in a merchandise category, makes so much flea market or Arab souk;
  3. Amazon has not made profits for more than 15 years. Can you afford the same thing?

By the way, Amazon does not make Big Money thanks to the sales of the e-commerce platform but thanks to the sale of all its ancillary services: Amazon Web Services (that is, all that it has learned over the years to be necessary for a company to be performing online).

Conclusions

An e-commerce that wants to succeed must necessarily show a reduced number of products per category so that the potential customer does not feel lost.

Online sales already have different levels of friction (the customer does not immediately bring the goods home, do not trust them to leave their credit card details, etc.), adding another is the best way to sell little or nothing.

Moreover, the statistics tells us that 20% of the products offered for sale on an e-commerce generates 80% of the turnover.

So, once identified, those products all the others go slowly eliminated without any fear.

Author Bio:

Jacqueline J Smith is a specialist in content marketing, she has a vast experience in writing different content on various topics. Currently she is associated with post production studios houses in Dubai Media City. In a meantime she also manage her own blog and reading books.

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