0161 368 9100

The Goldilocks Effect In eCommerce

goldilocks effect

One of the commonest examples of the Goldilocks effect is on wine lists in restaurants, where it’s commonplace that the wine with the greatest markup is placed in the second-cheapest slot on the menu; curators know that people don’t want to choose the cheapest bottle, but also cannot justify the most expensive bottles, so plump for somewhere in the middle.

As humans, we love making choices; when presented with options, we tend to want to make a decision. When there is only one product on the screen, the user chooses whether to buy or not to buy, and this, for argument’s sake, represents a 50/50 choice. When presented with 3 products, suddenly the user is choosing between products, rather than whether to buy or not. Subconsciously, they begin to forget that not buying a product is an option – and when they do remember, not buying a product now represents 1 of 4 possible choices, rather than 1 of 2.

the goldilocks effect
Even here, your brain automatically wonders which door you would choose – it takes a second to realise that staying where you are is also an option.

This formula is repeated across every sector – bronze, silver and gold packages or memberships is another prime example. In eCommerce, the technique can not only be replicated across product ranges, but even across entire websites.

Some customers online see price as a barometer of quality, and assurance of credentials. These are the customers who are accustomed to a particular brand, and willing to pay premiums to maintain brand loyalty.

Conversely, there are some customers who reject brands in favour of chasing a deal. For them, price is all-important, and they will scour the internet for the cheapest deal – even if that means waiting weeks for delivery and other inconveniences.

Most people, however, are looking for something of both these worlds. A price which they could call fair, or affordable, without being cheap – the security of buying from a recognised or semi-recognised brand, but without wanting to pay over-the-odds for a product online.

The Goldilocks effect in eCommerce works not by presenting 3 product variations on one page, but by actually developing three separate sites, with distinct branding and appearance.

On the first site – the cheap site – all effort goes into enhancing the “budget” look of the site, and products are sold at a price where you make money, but not the price at which you would ideally sell your items.
On the second site – the more expensive site – there is more emphasis placed on development and branding, and some marketing budget is set aside; after all, if products are bought on this site then you are making more money than you normally would!

On the third site – the one that’s just right – you list your products under your brand name at your normal price.

The data suggests that the vast majority of customers will buy from the middle-priced site; and that purchases on the cheaper site are at least counterbalanced by purchases on the more expensive site.

Online, your customers will always compare you. They’ll find other sites selling the same products and see how those product packages and businesses differ. If you own all three of the ‘competitors’ they find, then regardless of the choice they make they’ve become your customer and they’re buying your stock.

Employing the Goldilocks effect in eCommerce and marketing is a commitment, and requires careful strategic planning, but done right, can see firms swallow up a huge market share of their industry. To find out more, and for a huge discount on your 3 sites, contact our expert team at AsOne today.