According to a new book by Wharton marketing professor David R. Bell, where you live dictates how you use the Internet. In Location Is (Still) Everything: The Surprising Influence of the Real World on How We Search, Shop, and Sell in the Virtual One, Bell provides a framework for those who wish to understand why we use the Internet as we do.
In the following excerpt, Bell discusses the research that underpins the book and the implications for us all. For more about Bell’s research, see his recent interview with Knowledge@Wharton.
The TV was on in the background.
“He’s not the Messiah, he’s a very naughty boy!” Brian’s mom is half shouting, half shrieking to the hordes who’ve been following her son around in Monty Python’s Life of Brian, after mixing him up with someone rather more important.
Distracted, I took a look at the Daily Mail on my iPad.
The leader of the free world, it seems, has a slightly different problem. President Barack Obama, unlike Brian, is certainly a legitimate leader, but he has been crowned the “King of the Fake Twitter Followers” for having more than 19.5 million followers who don’t actually exist.
This past summer I’d been following another Bryan (Cranston) myself, in the form of Walter White, the central character in the hit TV show Breaking Bad. Walter was mentioned on Twitter nearly 200,000 times during the screening of the show’s finale in late September, and a disproportionate number came from real-world locations on the coasts of the United States. After the East Coast showing began, the tweets peaked at over 22,000 per minute!
I looked around my apartment.
I needed to unpack those Soap.com and Harrys.com boxes containing my household supplies and razors, respectively. I’d had them delivered to work, so they’d been sitting in the marketing department at Wharton for a few days. Perhaps due to the striking packaging, some of my colleagues were now placing orders, too. I wondered if there would be some ripple effect to their friends and neighbors as well.
In five days I was scheduled to travel to Tyler, Texas, and if I was going to catch the New Zealand All Blacks in their next big rugby game, I’d have to pipe the live feed from StreamHunter.eu and would probably join the commentary on Rugby365.com. There aren’t too many real-world rugby fans in Tyler, so the virtual-world community was my way out. I then had a fleeting thought: Was all this virtual-world connectivity making me too insular in my interests? What real-world delights in Tyler would I miss as a result?
It was getting late, but I needed to write a bit, so I reflected on a couple of my recent findings in a research project that had really intrigued me. One of my coauthors, Jeonghye Choi, and I had found that Diapers.com, a seller of baby products, had a dramatically higher demand for its services in locations where there were proportionally fewer households, percentage-wise, with young children. Real-world sellers in these locations weren’t too fussed about catering to these “minority” customers. So a virtual-world seller like Diapers.com was a godsend for these people.
Another coauthor, Jae Young Lee, and I had also just found that within real-world communities with high levels of trust and interaction, information about a virtual-world seller specializing in men’s apparel, Bonobos.com, shared by existing customers was more believable to potential customers. In fact, this real-world information transmission was driving a lot of the virtual-world sales.
Finally, I decided to turn in, but something in the New York Times caught my eye: “To Catch Up, Walmart Moves to Amazon Turf ” — and a (virtual) light went off before I flicked the real one down. The real and the virtual worlds are coming together in exciting ways, and there is a story to be told about why and how this is happening.
For as long as we’ve had trade and commerce, much of the underlying economics has been explained by location. Déjà vu! It startled me how much this remains true in the borderless, and often anonymous, virtual world. It became clear to me that night that it isn’t simply who you and I are that’s important for the answers but also where we are. Even in the virtual world, it’s still all about “location, location, location.” Furthermore, virtual-world sellers of products and content have very predictable demand patterns — once you understand where the target customers are.
“What we are finding is that the way we use the virtual world of the Internet — for commerce and for information — is dictated to a large extent by the physical world that each of us resides in.”
The Real World and the Virtual World
The voice-over that introduces Star Trek states that space is the “final frontier.” It is out there, vast and different from everything we are used to on Earth. Similarly, the Internet and its related technologies give us access to incredible new worlds of products and information. Only a few short years ago, these things were inaccessible and perhaps even beyond comprehension.
Since the Internet is a transformative technology, it’s obviously worth knowing how best to make use of what it offers. It can improve the way you spend your money, make your job more interesting (or even eliminate it!), transform entire industries, and connect you with others the world over. More broadly, it plays a key role in everything from the organic discovery of talented musicians like Lorde (the pop star from Devonport, New Zealand) to the trajectory of important political and cultural events like the Arab Spring, to why I stopped buying razors in the supermarket and get them directly from Harrys.com.
So while it’s one thing to use the Internet (most of us do), it’s another to understand how it might help, hurt, or alter our individual and collective lives. In fact, the impact it is having on our daily lives and on commerce all over the world exceeds anything that has preceded it. This includes momentous inventions such as the internal combustion engine and the printing press.
The sheer scale of the e-commerce sector in the economy gives some perspective as well. According to the most recent U.S. Census e-commerce reports, about $5.5 trillion changes hands online versus about $19 trillion offline. The rate of growth of e-commerce over the last decade exceeds 125% (more than four times the “nominal” rate for offline commerce). Among the four key sectors of the economy in general, manufacturing, wholesale, retail, and services, retail growth is the most explosive, exceeding 220% over the last decade.
“If you and I live under different physical circumstances and in different physical environments, we will use the virtual world very differently — even if we are very similar people in terms of our ages, incomes, education levels, and so on.”
What we are finding is that the way we use the virtual world of the Internet — for commerce and for information — is dictated to a large extent by the physical world that each of us resides in. This influence is pervasive, and sometimes counterintuitive, with implications for our lives in both worlds.
There is a key implication that I explore in Location Is (Still) Everything: If you and I live under different physical circumstances and in different physical environments, we will use the virtual world very differently — even if we are very similar people in terms of our ages, incomes, education levels, and so on. We’ll shop differently, search differently, and won’t be equally attractive to sellers.
So if we want to make sense of how we use the virtual world, we need to have a framework for understanding the different influences of the real world on how we shop, search, and sell online.
We’ll also need to think about what people want (e.g., the desire to get things done quickly, to have access to reliable information, and to be able to find great deals on things they’d like to have) and what motivates these desires. Sometimes people want to be transparent — or at least we want others to be. At other times, we’d rather be anonymous.
If we’re fully cognizant of these fundamental drivers of behavior, we can develop usable insights into the conditions under which the virtual world enhances, supplants, augments, or replaces what we do in the real one.
This knowledge is not only interesting in its own right (share it and you’ll be more popular at cocktail parties), but it is also practical for those of us who want to create new Internet businesses, turbocharge existing ones, or just better understand what these new technologies mean for us.
Young, wealthy, and well-educated citizens are the most active in the virtual world. This reflects the so-called digital divide, or the discrepancy between those who have access to the Internet and those who do not. Within a country, individuals who live in rural areas, or those with lower educational attainment and less income, tend to use the Internet less. Beyond this basic discrepancy in access, people in some locations are far more apt to shop online than those in others. Certain kinds of individuals use the Internet to “liberate themselves” from their lack of offline options.
Why are these things so?
The value of reviews and information depends a lot on from where (and not just from whom) they come from. Some sites generate almost all their traffic from particular locations. Buyers in online auctions prefer to deal with sellers who live close to them. When we shop offline, the distance that we need to travel to reach sellers always matters for our choices, but as I explain later, we’re even less willing to travel further when we’re searching for sellers on our mobile devices.
What’s behind these and other effects of the physical world on how we shop, sell, and search in the virtual world?
Location, as it turns out, is (still) everything.
Excerpted from Location Is (Still) Everything: The Surprising Influence of the Real World on How we Search, Shop, and Sell in the Virtual One, by David R. Bell. © 2014 by David R. Bell. Published by Amazon Publishing/New Harvest, July 2014. All Rights Reserved.