Digital Social Shopping and "Reason"

The topic of online shopping is so vast I have been kind of avoiding it. Partly because nothing I have to say about it fits into a blog post.

But one aspect of online shopping has been getting a lot of attention recently – the use of it as a mechanism for seeking discounts. Here is a survey that reports that 40% of Americans are spending more time comparing prices online.

Of course there is plenty of online price checking, discount seeking and reading of customer reviews to gain reassurance on purchases. These activities lead to the general perception that the Internet provides the discipline of computerized “reason” to our irrational and emotional urge to buy.

This thinking can be misleading for a number of reasons.

• Firstly, the idea that online shopping or investigating purchases online sits in contrast to ‘impulse purchasing’ is not necessarily true. Of course it is possible to impulse purchase online. My wife constantly impulse downloads 80’s tunes from iTunes that she runs across.
• And while the bulk of online activity may be about saving / reassurance some is also about indulgence. Consider the difference between the kind of social shopping sites that consumers use to compare prices with ThisNext. This site is the ultimate social shopping forum for those who are not looking for bargains but are looking to share enthusiasm to consume. The goals of users of ThisNext (who are 80% female) are hardly comparable with the users of Red Tag Deals or even Epinions.

We found that two groups of Canadian shoppers are the heaviest users of flyers – the most price sensitive and the least price sensitive. The former are looking for deals. And the latter are looking to enjoy consuming and the flyer was a means of doing that. It is wrong to assume that flyer use or online comparison or digital social shopping is motivated by a strictly ‘rational’ urge to seek discounts.

Related to this is the idea that even if consumers are using online tools to make “better” shopping decisions a recent post by Jonah Lehrer questions whether they are achieving their goal. He points to a published paper in the Journal of Consumer Research by Leonard Lee, Dan Ariely, and On Amir regarding decision-making implies that the slow rational, deliberate approach to decision making that you might use if you are shopping on-line does not produce “better” decisions than the fast, emotional, instinctive approach that you might use in a store.

Shopping and Dopamine

I am really enjoying the latest book by Jonah Lehrer : "How We Decide" (an excellent kind of Idiots Guide to neuroscience and decision-making).

I have also been reading his blog on neuroscience that has a few posts on shopping and the brain.
Essentially the act of shopping is pleasurable because when someone is seeing something they desire the nucleus accumbens (NAcc) floods the brain with dopamine. This is what urges people to buy.

This is essentially why sadness increases the likelihood of purchase. Shoppers attempt to offset sadness by increasing this pleasure. And this is why shopping, like gambling can be addictive.

Increasing desire is a basic function of all marketing and retailing. And many marketers and retailers understand that anticipation is an important element of the shopper or consumer experience. Again, the actions of the brain guarantee this. The most intense NAcc activity is not during consumption or after purchase but before purchase. Once an item is acquired the shopper is likely to experience 'dopaminergic adaptation' so the rate of NAcc activity decreases and pleasure declines. This is one of the reasons that the shopper can feel a sense of regret after purchasing.

Of course this is not just about shopping. The Buddha observed the same nature of desire - hence his pronouncement that trying to fulfill desire is like trying to slake thirst with salt water (or something like that).

It is fairly obvious that desire drives the urge to shop. But as I have noted before, this desire is mitigated by the hip-pocket nerve - or in neuroscientific terms, the insular cortex. Just as the NAcc makes the shopper feel good when the item is anticipated, the insular cortex delivers feelings of fear when the price is introduced.

Jonah Lehrer's conclusion is that retailers need to mitigate the sense of loss that activates the insula cortex. Of course that's what salespeople have been attempting since time began. I realise he is not entirely serious as he ventures out of his area of expertise into marketing and retailing but blunt discounting is one way but certainly may not be the most effective way - or the most profitable.

Neuroscience and behavioural economics certainly shed light on shopper behaviour. Although the conclusions are hardly earth shattering for marketers or retailers - who know all too well that increasing desire and decreasing reluctance to buy is their job. What it does show us is how much of the shoppers' evaluation is 'non rational'. It was previously assumed that desire was somehow 'emotional' and resistance was a rational function of careful evaluation. As a result, brand marketing was given the task of increasing desire through emotional messages and retailing then attempted to cater to the shoppers' 'reason'. In fact both are 'emotional' - and that does have implications for shopper marketing and retailing in general. More on that in the next post...