NEW YORK (MainStreet) -- The tides of retail shopping seem to be turning toward online holiday shopping this year as more and more consumers opt for online commerce over bricks-and-mortar stores for their gift needs.
And retailers know they’re on to something by getting shoppers to visit their online storefronts. Recent research from Binghamton University in New York indicates that consumers are more easily influenced when shopping online, especially on retailer websites where companies can control the flow of information about their products.
Researchers found that there was a “strong correlation” between online shopping and consumers’ natural tendency to want to “keep up with the Joneses”. When consumers get into that mindset, study researchers say, they’re more likely to be manipulated into buying goods after reading positive user reviews and favorable comments on the Internet.
“Households make decisions by following what they see their neighbors doing,” said Qi Wang, an associate professor of marketing at the university and lead researcher on this study. “People learn from their peers what to buy.”
The Binghamton research team examined the impact – positive and negative – of user comments and sales statistics linked to products retailers offer on their websites and found that “observational behavior” (described in the study as a consumer’s “tendency to adopt the same (shopping) habits of his or her peers”) led shoppers to be more influenced by what other online shoppers thought about a product and made them more likely to buy after positive user comments and reviews. They also found that shoppers weren’t that impacted by negative user experiences.
That’s welcome news for online retailers, as a new study by Marin Software says that Cyber Monday will edge out Black Friday as the most profitable day of the year for online retailers. And separate figures from Forrester Research peg online holiday spending at $60 million this year. That’s a 15% rise from 2010, with a huge chunk occurring on Black Friday and Cyber Monday.
Consequently, online retailers are pouring all the resources they can into “word of mouth” promotional campaigns, and are particularly building up user reviews and product commentaries on their own websites – and on big online portal giants like eBay (Stock Quote: EBAY) and Amazon.com (Stock Quote: AMZN).
Retailers are also starting to publish statistics on how many people have purchased a particular product, and the more of their peers buy a product, Binghamton researchers say, the more likely a consumer is to buy the item as well.
“It’s good news for manufacturers who haven’t had a lot of people buy their products,” Wang says. “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.”
Evidently, some sweet and sugary product feedback from other buyers goes a long way.
“What’s most surprising is the interactions of word-of-mouth and observational learning,” Wang says. “They strengthen each other.”
Wang, who analyzed user data from 90 digital cameras sold on Amazon.com to draw those conclusions, was especially surprised to see that, as the study puts it, “positive observational behavior data boosted sales, while negative observations had little influence.
“That has a lot to do with observational behavior,” she says. “(Usually) negative word-of-mouth affects people more than positive word-of-mouth. This is not new. With our study, we are the first to show the influences of observational learning. This is very important to companies thinking about what types of information can be posted on their websites.”
It should also give pause to consumers who rely too much on positive feedback before pulling the trigger on an online purchase. After all, just because that Jones guy likes the product, that doesn’t mean you will too.