Shopping cart abandonment is a major concern for online retailers. This happens when a visitor to the online retailer puts one or more items in their virtual shopping cart but then abandons the cart, leaving the retailer without having made a purchase. To reduce cart abandonment, one online retailer is considering a “
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Shopping cart abandonment is a major concern for online retailers. This happens when a visitor to the online retailer puts one or more items in their virtual shopping cart but then abandons the cart, leaving the retailer without having made a purchase. To reduce cart abandonment, one online retailer is considering a “pop-up” free shipping offer to visitors who put an item in their virtual shopping cart. The online retailer decided to test the effectiveness of this free shipping offer. During a randomly selected two-week period, 718 visitors to the website placed at least one item in their virtual shopping cart. The retailer offered free shipping to 350 of those visitors; the remainder did not get the offer. Of those who received the free shipping offer, 191 abandoned their carts. Of those who did not receive the offer, 246 abandoned their carts.
- In the image attached, you will find a 2×2 contingency table with the free shipping offer (Yes/No) by row and cart abandoned (Yes/No) by column. Complete the contingency table with actual frequencies (not probabilities), including joint and marginal frequencies, using the information given.
- Compute the expected frequencies, assuming independence, of the free shipping offer (Yes/No) and cart abandoned (Yes/No).
- Use the expected and actual frequencies to determine if cart abandonment depends on whether or not one had received the free shipping offer. Specifically, report the appropriate test statistic, the p-value for that test statistic and your conclusion at the α = .05 level, based on that p-value.
- Now compute the probability that a visitor who had received the free shipping offer abandoned their cart. Then compute the probability that a visitor who had not received the free shipping offer abandoned their cart. If it offers free shipping to 10,000 randomly- selected customers, how many additional orders should the online retailer expect?
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