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New research shows correlation between online shopping and keeping up with the Joneses

Just in time for Cyber Monday. Online retailers have long wondered if trumpeting consumer-behavior statistics on their websites could hurt business. New findings from Qi Wang, an associate professor of marketing at Binghamton University, should ease their fears.

Wang studied the effects of user comments and sales statistics that accompany products offered on e-commerce sites. While the impact of positive and negative feedback has been well understood, much less was known about so-called “observational behavior” – aka a person’s tendency to adopt the same habits as his or her peers. Wang’s findings were published in the Journal of Marketing Research.

According to Wang, households make decisions by following what they see their neighbors doing. People learn from their peers what to buy. For online marketers, word-of-mouth recommendations are displayed in the form of customer reviews. If the site also reveals statistics on how many users purchased the product, the shopper also can be influenced by observational behavior.

Wang analyzed data on 90 brands of digital cameras from Amazon.com, which includes a section disclosing the percentage of people who bought the product after viewing it. She and her colleagues found that positive observational behavior data boosted sales, while negative observations had little influence.

The results dispel a myth in e-commerce that consumers are likely to be discouraged if they see a low percentage of peers following through with the purchase. Wang sees it as good news for manufacturers who haven’t had a lot of people buy their product. If it’s a niche market just targeting a small group of consumers, they don’t have to worry because there is no harm in releasing this type of information.

Wang also identified a synergy between word-of-mouth and observational learning and found, much to her surprise, that the interactions strengthen each other. Previous market research indicated that consumers often dismiss highly positive product feedback, realizing that a person writing favorable comments may be biased. Highly critical product feedback is viewed as more reliable. For observational learning, the opposite is true.

Written by Binghamton University

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There are 5 comments

  • Terese Roy, Tunes Online says:

    This is absolutely true in that people are extremely influenced by what others say about a product. With online shopping reviews, you don’t know if they are biased or not because you are not hearing it straight from the person, so it makes the positive seem more real. We know how influential other people’s opinions are to someone’s buying decisions, so we try to do whatever we can to make the online buying and selling experience as enjoyable as possible.

  • Robert Shin says:

    When shopping on amazon, I tend to do the same thing. I'll start by sorting the item I want by highest number of reviews. I mostly read the positive reviews to see how people are enjoying the product. I often found myself being influenced by the positive reviews and not care much about any negative reviews of the product.

  • Payday Loans says:

    Very true! Especially in my experience with my families and friends. We are Vietnamese and within our community, everyone know each other. When someone bought something new, you have to get it also.

  • Pretty nice article!. I am totally agree with your stuffs about regular growing rate of doing online shopping by shoppers. Actually everybody prefer to do shop online for everything. As it's convenient and time saving way to purchase need things. I live in India and nowadays Indian peoples most prefer to do shopping online, for saving enough time, money and also energy.

  • James Stein says:

    The economy may still be sluggish and unemployment at a stratospheric level, but you wouldn’t know it if you were an online retailer this past Monday. Cyber Monday has quickly become one of the biggest shopping days of the year and, with mobile shopping still in its early days and traffic growing by more than 200%, there is little doubt that next year’s numbers will be even more impressive. It would also be helpful if the economy begins to grow at a healthier rate and unemployment falls to a less apocalyptic level (today’s news about it falling by 0.4% is encouraging). http://blog.unibulmerchantservices.com/americans-

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