Trust and tribulation online

Written by Rakesh Raman | Updated: Jan 4 2008, 05:35am hrs
Can you visualise a market in which marketers sit idle and consumers peddle their products to fellow consumers Sounds cock-eyed, but it might happen. The way social networking is spreading its tentacles in the web world, consumers are likely to buy more of what others recommend. At least thats what most e-commerce proponents believe.

There are already plenty of online sites that encourage users to write reviews on different items for others to know their pains or pleasures. And this is gaining gigabytes in cyberspace. Consumer-to-consumer (C2C) marketing is now called social commerce. A recent study done by the Net usage measurement company comScore and media research firm Kelsey analysed the impact of consumer-generated reviews on the price consumers were willing to pay for services delivered offline. The study, based on a survey of over 2,000 US Internet users, revealed that consumers were willing to pay at least 20% more for services receiving an excellent or 5-star rating than for the same service receiving a good or 4-star rating. The survey covered services such as restaurants, hotels and travel. And one-fourth of users preferred to check online reviews before buying a service offered offline.

Okay, all this may be true in the case of services. But what about, say, consumer durables like fridges, game consoles, cellphones and laptops The social marketing model here looks hazy. Few would shell out capital simply on the word-of-mouse of fellow Net users, most of whom are too nave to offer reliable advice on the features of, say, a tech gadget. This is especially true for a developing market like India, with most users interested only in basic product features.

Take mobiles, for instance. As most use their phones for plain voice calls or SMS, they will hardly be interested in knowing more from others. Consumer reviews can be helpful if people want additional information on the usage of mobile data services, which are complex, expensive and understood by only a few who actually use them in India. Likewise, user comments on wireless Internet connectivity, wi-fi, on laptops can be useful, but its usage too is scarce. Theres hardly any community of advanced consumers who want to share information with other remote users.

Basic product features are common to almost all brands in every product category. So, price becomes the purchase determinant. And user comments on pricing are irrelevant because prices are typically fixed and available on vendors sites.

All this leads us to a market paradigm of increasing commoditisation, where user-generated product reviews are redundant to most. If you plan to buy a laptop, for instance, a sketchy user comment like its display is not very good is not going to influence your purchase decision. Can a few comments by a handful of users matter Another factor that renders user-generated reviews useless is marketers tricks. Theres always the likelihood that some vendors write such online reviews themselves under vague identities in their own products favour just to hoodwink potential buyers. So, if trust other consumers they must, consumers should depend only on those they know, and with whom direct interaction is actually possible. Also, an experts advice could be helpfulsay, an editors reviews that appear on a trustworthy media website. In any case, random user reviews carried on assorted websites will only mislead buyers. And this user-generated data can never substitute the findings of systematic consumer market research on different parameters for different product categories.

Marketers would, of course, leave no stone unturned in creating online user communities around their offerings. Enhanced user involvement simply spells more sales. And social commerce offers a cost-effective marketing tool to attract more consumers and solicit consumer feedback for methodical analysis. However, if applied in a freewheeling fashion as its currently happeningsocial commerce would confuse more consumers than itd enthuse.

The writer is a technology market analyst. These are his personal views. Email: