Learning to Rank an Assortment of Products

Kris J. Ferreira (), Sunanda Parthasarathy () and Shreyas Sekar ()
Additional contact information
Kris J. Ferreira: Harvard Business School, Boston, Massachusetts 02163
Sunanda Parthasarathy: CVS Health, Woonsocket, Rhode Island 02895
Shreyas Sekar: University of Toronto Scarborough and Rotman School of Management, Toronto, Ontario M5S 1A1, Canada

Management Science, 2022, vol. 68, issue 3, 1828-1848

Abstract: We consider the product-ranking challenge that online retailers face when their customers typically behave as “window shoppers.” They form an impression of the assortment after browsing products ranked in the initial positions and then decide whether to continue browsing. We design online learning algorithms for product ranking that maximize the number of customers who engage with the site. Customers’ product preferences and attention spans are correlated and unknown to the retailer; furthermore, the retailer cannot exploit similarities across products, owing to the fact that the products are not necessarily characterized by a set of attributes. We develop a class of online learning-then-earning algorithms that prescribe a ranking to offer each customer, learning from preceding customers’ clickstream data to offer better rankings to subsequent customers. Our algorithms balance product popularity with diversity, the notion of appealing to a large variety of heterogeneous customers. We prove that our learning algorithms converge to a ranking that matches the best-known approximation factors for the offline, complete information setting. Finally, we partner with Wayfair — a multibillion-dollar home goods online retailer — to estimate the impact of our algorithms in practice via simulations using actual clickstream data, and we find that our algorithms yield a significant increase (5–30%) in the number of customers that engage with the site.

Keywords: online learning; product ranking; assortment optimization; e-commerce (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:3:p:1828-1848

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