Social Contagion and Online Consumption

What drives you to try new technologies? For most of us it is seeing or hearing of someone else trying the thing.

But here is a question: Is the role of proximity in consumption reduced online? In other words, when I can’t observe how and what you are buying does it reduce the likelihood I will try or buy something?

A new study (relying on data from and covering nearly 30,000 U.S. zip codes and the first 45 months of Netgrocer’s life) by Wharton professor, David Bell, weighs in with some useful findings:

Bell’s study found a significant “neighborhood effect,” with 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.

Why would this be the case? Bell has some ideas, and they make eminent sense:

“It could be that you and I live in the same apartment building and one day you come home from work and see this box in front of my door with written on it. Or maybe we work together and I mention my experience using”

In other words, far from being a tool for separation and solitary behavior, some online activities have a social root at their core — including consumption. So next time you want to convince people to try your new online service don’t waste money on ads; leave boxes in condo and apartment building lobbies instead.