Harvard Business School professor John Gourville says that offering too many different choices in products can backfire, causing overwhelmed shoppers to run screaming from the store or worse, to turn to your less-diversified competitor. However, a variety of choices isn’t always bad—if the choices are aligned to a single product (think Levi’s 501 jeans in hundreds of different sizes), customers will appreciate the assortment. But non-alignable assortments, such as the plethora of cold remedies on a drug store shelf, represent “overchoice” that can dampen customer enthusiasm. “The question is which alternatives to eliminate and what the customer response will be,” says Gourville. “In the case of one online grocery retailer, by reducing their assortment in various categories by 20% to as much as 80%, they increased their revenues by 11%.” Gourville says in other cases, companies walk their customers through the selection process via a series of questions that eventually zero in on what the best choice would be. “In all these cases, by either reducing the number of alternatives or helping consumers through the decision-making process, a company can reduce the complexity of the choice and reduce the consumer’s feeling that they might be making the wrong choice.”

HBS Working Knowledge 6 Sep 2005