Effects of E-Retailer Provided Information and Social Influence on Purchase Decisions

We investigate drivers of consumer purchase decisions when shopping experience goods online, using the context of expertise literature in business topics. Based on 60,000 books from Amazon.de, we test hypotheses on the effects of (1) “brand” characteristics (author’s background, reputation, experience, demographics), (2) product characteristics (publisher, price, page count, reading excerpts, cover), and (3) social influence in terms of observational learning (OL), word-of-mouth (WOM), and expert opinions, on sales. The results demonstrate that online demand depends on a mix of these factors; yet, sales are largely determined by brand characteristics. In fact, the market’s perception of the author alters consumers’ price sensitivity and renders observable product characteristics insignificant; social influence amplifies this effect. These issues are underexplored since studies often focus on WOM effects without considering brand and product characteristics, and the relative effects of social influence, on purchase decisions. The paper shows how to target online demand more effectively.