A Machine Learning Framework for Predicting Purchase by Online Customers based on Dynamic Pricing

Pricing in the online world is highly transparent & can be a primary driver for online purchase. While dynamic pricing is not new & used by many to increase sales and margins, its benefit to online retailers is immense. The proposed study is a result of ongoing project that aims to develop a generic framework and applicable techniques by applying sound machine learning algorithms to enhance right price purchase (not cheapest price) by customers on e-commerce platform. This study focuses more on inventory led e-commerce companies, however the model can be extended to online marketplaces without inventories. Facilitated by statistical and machine learning models the study seeks to predict the purchase decisions based on adaptive or dynamic pricing of a product. Different data sources which capture visit attributes, visitor attributes, purchase history, web data, and context understanding, lays a strong foundation to this framework. The study focuses on customer segments for predicting purchase rather than on individual buyers. Personalization of adaptive pricing and purchase prediction will be the next logical extension of the study once the results for this are presented. Web mining and use of big data technologies along with machine learning algorithms make up the solution landscape for the study. : Machine Learning; Dynamic Pricing; Predictive Modelling; Consumer Behavior