Peer Recommendation in the Online Market
Online shopping has become a way of life. Groceries are bought online. Pizzas are ordered online. Cars, houses, furniture – all available online. Globally, more than 50% of the world’s internet users have made a purchase online in the last month.
What makes an online shopping website successful? Is it frequent offline advertising like Ferrit has done, or word of mouth like Trademe?
Latest research has concluded that the power of peer recommendation is one of the strongest in terms of selling goods online. Consumers now count on each other, rather than marketers, for insights on purchasing decisions. Recommendations have become the new currency of e-commerce.
35% of online shoppers say they are more likely to return to an online shopping website if that site makes personal recommendations to them – suggestions on what they may like, based on the purchasing habits of others who have bought the same product. Another survey has determined that 66% of New Zealanders regularly buy from one site, and 1 in 4 buyers completely relies on recommendations to find out which website to browse when intending to buy.
With the strong impact of personal recommendations realised, a market gap has recently been filled by social networking websites which link the things one user likes to the online store which supplies them. Have you just listed Titanic as one of your favourite movies? Your friends can now follow the link to buy it on Amazon.
Personal recommendation does not necessarily apply to just products either, but also suppliers. When was the last time you bought someone in an online auction without checking their feedback first from their previous sales?
Next time you click that ‘add to cart’ button, think about how important feedback and personal recommendations are to you, and how they shape your purchasing habits.
Image from Flickr.
April 23rd, 2008 at 11:08 am
Normally there is no big difference in consumer behavior between online and offline purchasing. The same fundamental concepts apply to both these channels.
We naturally attached importance to recommendations from someone we know and trust. This might be particularly important for online shopping, since consumers can’t “see and feel” real people. In addition, online shopping is also a new medium and it takes time to create trust/loyalty. Nevertheless, there are many similarities between online and traditional shopping; customer service, ease of shopping etc. are universal concept regardless of channel. Online shopping does facilitate the exchange of opinions through product and retailer reviews.