December 16th, 2013 by Sarah Sluis

Purchases signify who we are, broadcasting status or lack of sophistication. We may fear looking like a glutton for ordering too much food. Or that we will look stupid for not being able to pronounce a product name. Or that our high-maintenance, unusual requests may brand us weird or unsavory. Fear of being embarrassed actually holds people back from making certain kinds of purchases, according to “The Effect of Social Interaction on Economic Transactions: An Embarrassment of Niches?,” a study conducted by management professors Avi Goldfarb, Ryan McDevitt, Sampsa Samila, and Brian Silverman. The results of the study have real implications for all kinds of sales, whether it’s ecommerce, brick-and-mortar businesses, or even business-to-business transactions.

The observational study searched for naturally occurring examples where “social frictions” had the potential to “substantially affect market outcomes,” the authors describe. At a regional U.S. pizza chain, the differences between online and over the phone ordering at revealed how the decreased social interaction of online ordering changed what people ordered.

When the pizza chain implemented online ordering, they compared the orders of the 6.7 percent of their customers who moved from ordering on the phone to online. The customers who ordered online submitted orders that had 15 percent more complexity and three percent more calories. Double bacon proved popular online, while double veggies did not. Despite the fact that orders were more complex and used more esoteric ingredients, both factors that affect profits, the pizza chain earned more. The uninhibited online customers upsold themselves, leading to 21.4 percent more profits per customer.

For brick-and-mortar stores, the study’s authors turned to Sweden, where liquor and wine can only be purchased at state-run stores. As the state considered moving from a counter service model to one where customers could browse the merchandise before bringing it to checkout, they created a tightly controlled study with matched pairs. As it turned out, sales went up 20 percent.

Like the pizza customers who ordered more unusual toppings, booze buyers began diversifying their orders, choosing Stolichnaya for vodka instead of the easier-to-pronounce Absolut, and ordering more French wines. People who might have been embarrassed to order something before due to their inability to pronounce an item branched out.

There’s also something to be said in both cases for the fact that items were displayed differently in each instance, something the study’s authors don’t appear to consider in their explanation of their findings. Someone ordering a pizza over the phone may not be consulting a menu, making a “medium pepperoni” the default option. In contrast, online checkout usually presents all topping options in a list, preventing problems of recall and giving people more time to deliberate. The same logic applies to the liquor store example. When ordering a bottle of vodka at the counter, one may simply order the first brand name that comes to mind, especially if one can’t inspect an unfamiliar brand beforehand. Assuming there aren’t promotional displays, more unusual brands have a better chance of being picked if they’re laid out as if they’re completely equal on the shelf.

Even salespeople who don’t think their products are embarrassing should examine their own customer interactions to see if there are ways to make consumers more comfortable. After all, who would have thought ordering a pizza would have been embarrassing? Business-to-business salespeople selling complex products should consider if prospective customers may feel afraid of asking questions that reveal their lack of knowledge, and plan accordingly. Online retailers should stock a different mix of products online compared to in stores.

The authors of the study themselves are bullish on the implications of this data. “Speculatively, as a larger share of transactions move online, the prevalence of what was previously embarrassing economic activity will continue to increase,” they write, increasing overall welfare as more consumers enjoy their double pepperonis and Stolichnaya in peace.

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