The Impact of Displaying Quantity Scarcity and Relative Discounts on Sales and Consumer Returns in Flash Sale E-Commerce

Abstract

Flash sale e-commerce is a very competitive business with low margins due to the high discounts granted. Against this background, merchants pursue the goal of generating as many orders as possible. To achieve this, techniques that stimulate impulse buying behavior are often used. This paper examines two specific instruments that have the potential to contribute to impulse buying, namely, the on-site display of (1) scarcity notifications and (2) the relative discount provided. We use real-world data from a flash sale e-tailer to analyze the impact on customer sales and returns. In that regard, this study is the first to focus specifically on fashion, which is the product category most affected by returns. Furthermore, to synthesize both perspectives, a quantitative model is presented to serve as the basis for a decision support system that enables managers to better deal with the underlying trade-off.