Products that add sustainability-related labels see a 13% to 14% increase in sales on Amazon in the first eight weeks after adoption, a new study published in Harvard Business Review has found.
The study, undertaken by Sherry He, assistant professor of marketing at the Broad College of Business at Michigan State University, and Caroline Wang, PhD candidate at Northwestern University, examined more than 10 months of Amazon sales data.
First, the researchers compared 1,350 products featuring the online retailer’s ‘Climate Pledge Friendly’ label, to more than 16,000 similar, unlabelled products.
The researchers also took into account variables associated with marketing activities, such as sponsored advertising and price promotions, as well as other attributes that may impact sales performance, such as baseline sales performance, price promotions, organic search ranks, and advertising activities.
‘Through this analysis, we found that on average, adding a sustainability label to a product boosted consumer demand for that product by approximately 13% for eight weeks after the addition of the label,’ they noted. ‘This held true regardless of the type of product, and it was not driven by changes in pricing strategies (e.g., changes in base price, coupons, or discounts) or advertising activities (e.g., new sponsored listings).’
Second phase of research
Following on from this, separate research was undertaken with more than 2,600 products featuring third-party sustainability labels (i.e. not from Amazon) with close to 18,000 unlabelled products. In this case, said labels boosted consumer demand by approximately 14% for eight weeks after the addition of the label.
As the researchers noted, the rise in sales in both cases was not due to improved visibility in search rankings or consumers using filters to find sustainable products. Instead, shoppers browsing for products unconsciously gravitated toward items with sustainability claims.
The type of sustainability claim being used also played a part – for lower-priced items, carbon-neutral messaging proved effective, while for more expensive items, claims such as reduced carbon footprint, the use of organic materials, and the absence of harmful ingredients helped increase demand.
‘Clear, easily accessible information’
‘Our research also reveals that sustainability labels influence consumer choices by providing clear, easily accessible information about product features,’ the researchers noted.
‘What drives demand isn’t the complexity behind the label—such as the certification process or certification costs—but the easily accessible certified attributes themselves. In other words, consumers rarely investigate the details behind a label. Instead, they engage in passive search: They don’t actively seek out sustainable products, but when presented with both labeled and unlabeled options, they’re more likely to choose the one with the label.’ Read more here.
