Black -owned businesses can significantly increase their sales, we found them in a recent study.
In June 2020, the YELP business review website introduced a feature that allowed consumers to look for black owned restaurants. As professors studying digitalization, inequality and technology economy, we were interested in understanding its effect. So we have analyzed more than two years given by YELP.
We found that black -owned restaurants were labeled 65% of online traffic, more research and calls, and higher sales through food orders and visits within people. These results suggest that for many black -owned businesses, a simple change in their visibility can create new opportunities for growth.
However, the impact varied from location. Profits were stronger in politically liberal areas and countries with lower levels of implicit racial prejudices, measured by regional change in the results of the implicit association test. This suggests that platforms are partly sewer, compared to creation, client demand. Interestingly, white customers run most of the growth, suggesting that the label helped raise awareness of businesses they might not have considered before.
This was not just a 2020 trend in the following analysis, we found similar results among the businesses that later chose in features. We also collaborated with the online furniture company Wayfair, which launched a “Black Maker” label on its 2023 site, and found that it led to a 57% increase in online traffic. Finally, YELP wrapped a Latino owned label on the platform at the end of this year, which led to a similar increase in consumer engagement.
Why does it matter
This research has implications for business owners, digital platforms and policymakers. Increasing awareness of racial inequality and partially promoted by the Black Lives Matter movement, especially after the killing of George Floyd in 2020-led to an increase in corporate and customers’ interest in supporting businesses owned by minorities. She also led many companies to make commitments to promote racial equality.
However, recently, many companies have dismantled these efforts. Target, for example, recently announced that he was eliminating his program for the attention of black -owned businesses. Our findings suggest that the increase in the visibility of minority ownership-a relatively low-cost change to significantly improve economic results for black ownership businesses.
Our results also show that diversity initiatives are not just about warm and vague feelings. Businesses need to measure and appreciate their influence to ensure that their programs are effective. A well -designed program can benefit from the bottom, while a poorly designed risks being ineffective or even counterproductive.
So it is important to accept the potential risks. Past research, including some of ours, shows that detection of racial identity can sometimes lead to discrimination or reaction. While our findings suggest that labeling can have positive effects, a poorly implemented policy can be fiery. The YELP initiative design empowered users seeking to support black -owned businesses while allowing other users to continue looking alternatively.
This means that policy drafting is essential. What matters is not only what the information has been discovered, but also how it is communicated. Our analysis shows that customer demand and preferences vary significantly in places and demographics, which means that the context also matters.
What is still unknown
While our research suggests that businesses suffer economic benefits from the approved of the label, it is important to understand which policy models work better in the long run. For example, the YELP program used an OPT feature, which may have contributed to its success.
However, open questions remain. How are platforms influenced by business labeling? What other types of labels can be influential, and for what types of businesses? Can some fire interference?
Another main question is, which clients respond to racial identity disclosures? Recent advances in data analytics can help companies refine their strategies, making it easier to aim for customer groups for more effective initiatives.
After all, our study is a step towards understanding how transparency and visibility can form economic results. He underlines a diversity initiative that has benefited both clients and businesses, and provides a road map for companies that want to compile initiatives that matter. And, more widely, it speaks of a question that all companies face: how can companies understand and form their social trail better?