Consumers shopping for products online often have the benefit of reading customer reviews. Other consumers who have bought the product relate their experience, both good and bad.
Some websites also show how many consumers bought the product after consulting the reviews. While some merchants have fretted that this policy could scare off potential sales, the research suggests otherwise.
Qi Wang, an associate professor of marketing at Binghamton University, 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.“Households make decisions by following what they see their neighbors doing,” Wang said. “People learn from their peers what to buy.”
Observational behavior
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.
“It’s good news for manufacturers who haven’t had a lot of people buy their product,” 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.”
Processing the information
Consumers, it appears, are able to process the information they are given and make independent judgments based on the data in its entirety.
“What’s most surprising is the interactions of word-of-mouth and observational learning,” Wang said. “They strengthen each other.”
The research backs up what consumer advocates have long argued -- providing consumers with as much unfiltered information as possible can be good for all concerned.
