This paper describes opportunities and challenges of using functional data
analysis (FDA) for the exploration and analysis of data originating from
electronic commerce (eCommerce). We discuss the special data structures that
arise in the online environment and why FDA is a natural approach for
representing and analyzing such data. The paper reviews several FDA methods and
motivates their usefulness in eCommerce research by providing a glimpse into
new domain insights that they allow. We argue that the wedding of eCommerce
with FDA leads to innovations both in statistical methodology, due to the
challenges and complications that arise in eCommerce data, and in online
research, by being able to ask (and subsequently answer) new research questions
that classical statistical methods are not able to address, and also by
expanding on research questions beyond the ones traditionally asked in the
offline environment. We describe several applications originating from online
transactions which are new to the statistics literature, and point out
statistical challenges accompanied by some solutions. We also discuss some
promising future directions for joint research efforts between researchers in
eCommerce and statistics.Comment: Published at http://dx.doi.org/10.1214/088342306000000132 in the
Statistical Science (http://www.imstat.org/sts/) by the Institute of
Mathematical Statistics (http://www.imstat.org