E-Commerce and the Paradox of Choice

How too many choices could be destroying your e-commerce conversion rate.

In 2004 Barry Schwartz wrote the book The Paradox of Choice. In it he discusses how too much choice complicates life and creates anxieties. The very thing that we hold dear in Western civilization—the freedom of choice—creates its own set of issues. This concept is never more apparent than in e-commerce shopping.

The vast array of product choices and variations of even one choice has the potential to create buyer confusion and a fear of missing out—FOMO. Because of this, people spend more time looking for even the simplest of products, and abandon their cart at higher levels than ever before. So it begs the question: Is more choice in an e-commerce store that good of an idea? Let’s take a look at the buyer’s journey, the benefits of choice (as well as the negatives), and then draw some conclusions based on actions we’ve taken to help shape our opinion.

How Do We Choose Something?

Schwartz describes a consumer’s strategy for most thought-out decisions as going through the following steps:

  1. Decide Your Goals
  2. Evaluate the Importance of Your Goal
  3. Look at Your Options
  4. Decide if Your Options Meet Your Goals
  5. Pick the Best Option
  6. Modify Your Goals

Now, let’s take a look at this process as it pertains to an e-commerce transaction.

Deciding Your Goals:

Let’s say your goal is to buy a new coat, and you have your heart set on a leather biker jacket. You also have a secondary goal: spending less than $200 on that leather jacket. Both are important, so in your buyer’s journey, the jackets you look at must meet these two criteria.

Evaluating the Importance:

This question can have a number of factors to consider. One can be, does it fit your budget right now? If you don’t have the $200 or less to spend, this would be a low priority to complete this transaction. You might intend to purchase a jacket in the future, but right now you’re just window shopping. However, if you have the money, or you have an event coming up that you want the jacket for, the urgency behind completing this transaction will start to go up.

In our example, let’s pretend you have the $200 to spend and the time factor isn’t a major issue. Now you want to find the best value for the style you want.

Looking at Your Options:

Now comes the fun part for the buyer and the not so fun part for marketers and e-commerce store owners—the search! Window shopping online is something we all do every day. And as marketers, we try to find what makes someone complete an order instead of just leaving it in a cart or just going away.

Search results for leather biker jacket under $200

So we try to give people huge amounts of choices, tons of information about the product, and a smooth and streamlined buying process. But with this plethora of choices, are we harming the odds that shoppers will choose us?

Generally, if people have a budget to spend, they’re going to assess price, shipping, and any extra fees before making a final decision. In the below photo, you can see that the company has reviews, explains their shipping and return policy, and also includes price matching information. If this is the style I like (which I do), I might not search much more. This is below my budget, they have fast shipping according to the reviews, and previous shoppers said to order a size up for maximum comfort. I don’t need to go much further. Why? They also didn’t give me 10 different choices of basically the same thing.

An example of the purchasing page for a classic leather biker jacket.By contrast, look at Amazon. There’s the illusion of choice. Essentially, 6–7 different listings for the same kind of product. Now I have to read all the different reviews, what the product is made from, etc etc. While there’s tons of options (this is just the first page, I’m sure there’s other listings), I feel overwhelmed and don’t know which one is right for me quickly. Amazon may get a lot of things right, but because of their size, this is one thing they get wrong about buyer wishes.

Amazon "recommended for your" product listings showing the paradox of choice.

Did Your Decision Meet Your Goals?

This is a pretty simple “yes” in this case, but it’s not always so clear. I won’t know until I make the final decision and receive the product. But from first glance—yes. In all my searching, the company with the least options ended up having the best choice available and at the best value.

Time to Buy

Now that I’ve decided that one company has the best option for me, it’s time to pull the trigger and see if they live up to the hype.

Did You Get it Right?

Once a buyer gets the product they then determine if they’d do the exact same thing again, or if they’d modify their goals to get something more in line with what they thought they wanted. As a business, your goal is to make sure that you’re setting the right expectations of the purchase. If I’m expecting the same quality as a $400 Wilson’s Leather jacket for $79, I might be disappointed.

If that’s the case, the next time I go to purchase a jacket, I’ll change my goal to be: “I want the best jacket I can get, and I’m willing to spend more money.”

What Are the Benefits of Limiting Choice?

There are two main benefits—one for the searcher and one for the search engine. In order for this to work, however, your business needs to be niched into a category that the searcher and the search engine can understand.

For the searcher, limiting options makes it easier for them find what they want in a timely manner. While they might go to several different websites to find what they want, sites with specialties and limited choices allow them to find what they are looking for faster and with some comfort that you know your industry. You can also tailor your branding and messaging to meet the demographics that are going to be browsing your website.

For the search engine, having a specific vertical gives the engine a better understanding on what to categorize your company for, and that your products will better meet the searcher’s needs.

What Are the Drawbacks of Limiting Choice?

It’s pretty simple to understand what the only drawback is: you’ll never sell that product. If you could stock 10,000 products because you have the inventory, but don’t for a number of reasons, you could be worried that you’re missing out on sales. And to a certain extent, this is largely true. You’re never going to sell a product you don’t carry. However, if not carrying the exact same product by a different manufacturer is going to be the difference between someone purchasing from you and getting overwhelmed and going elsewhere, which is more beneficial?

When we’ve done this with clients in the past, we’ve taken a long view of their orders. Generally, we look at 1-2 years of sales data and cull products that have never sold, or sold less than a specific amount during that time period. In many cases the vast majority of their sales came from only a few products and the rest could be cut out.

How Does it Impact Your E-Commerce Store?

When you start to limit choices you also get some website benefits. Less products means a lighter website. If you’re not constantly pulling up a database of hundreds of thousands of SKU’s it can dramatically impact load times. Site load times are an SEO ranking factor and a factor for purchasers. We’re an impatient society, so if it takes an extra second to load a product, we generally have a higher bounce rate.

Additionally, if you look at your search volumes, people are more often looking for kinds of products and not specific products. If they want a specific product, they more often than not go to your website, and search for it there. If you don’t have it, they are just going to move on. By looking at the search results on your website, you can find which things no one is looking for, and start culling those items.

Freedom of Choice is an Illusion

We tend to get the idea that if we have more choices we’re freer to choose what we want to meet our goals. But the reality is that all of these choices are just lengthening our buying cycles and giving us more fear of missing out on a better deal. In the image from Amazon’s site, they gave the illusion of choice. But several of the examples were the exact same product listed differently. I’m getting the illusion of choice, while still being given just variations on a product.

The real freedom for buyers, searchers, and e-commerce store owners is limiting that illusion and giving people what they want. If we as marketers and business owners give them that, we can not only compete with large e-commerce retailers, we can start to own our niche marketplaces.

Published 03/05/19 by Matthew Perkins