Wharton has published a study by Prof. David R. Bell and PhD candidate Sangyoung Song, which found a significant "neighborhood effect" in consumer selection of an online retailer. Instead of a physical neighborhood, the effect was related to the connectiveness of the early adopters of the retailer's services, finding "a 50% increase in the base rate of consumers trying an online retailer's services once they talked about or otherwise observed its use locally".
They studied data provided by Netgrocer from its May 1997 launch to January 2001, "a complete and exhaustive list of all 382,478 transactions that had taken place nationwide.".
"Other studies in economics and sociology have argued for and demonstrated the existence of neighborhood effects in a number of diverse contexts; however, they have not been shown to operate on the Internet," Bell's paper notes. "Some researchers have even speculated that the Internet may contribute to individuals becoming more diffuse and solitary in their behavior. Conversely, our empirical findings are consistent with the proposition that social interaction stimulates trial of a new Internet service."
"Social Contagion and Trial on the Internet: Evidence from Online Grocery Retailing," is available free online at Knowledge@Wharton.
Posted by dougsimpson at October 7, 2004 11:44 AM | TrackBack