Effect of Online Reviews on Consumer Purchasing Habits

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Effect of Online Reviews on Consumer Purchasing Habits

by ICC on May 15, 2018
May 15, 2018 / by / in

Online reviews are ubiquitous, and almost everyone who uses an app or surfs the web encounters them all the time. This broad usage varies significantly to the pre-digital age. Instead of expert reviewers, there’s a new breed of crowd-sourced reviews that people use to make purchasing decisions.

This new era replaces Word of Mouth and expert reviewers and puts the power in the hands of the crowd. All of this emphases brings up the question, how do these reviews influence shoppers? The query is crucial enough that several studies exist to research the issue.

report by Lisa Hankin for the University of California, Berkeley, The Effects of User Reviews on Online Purchasing Behavior across Multiple Product Categories, delves into the correlation between reviews and buying behavior in details.

Keep in mind; there are now many sources for ratings. In the past, marketplace websites were the primary place where they mattered. Currently, some independent websites and apps track consumer satisfaction. Not only that, social media networks and other distributors of product links also allow for ad-hoc feedback. That means a continuous review cycle is now an expected part of internet behavior.

Does Positive or Negative Feedback Impact Purchasing Behavior?

Do all of these signals, both good and bad, actually persuade and inform the buying process? Studies that attempt to find out the answer show mixed results. One such research suggests that eBay users ignored negative feedback and only positively reward listings with higher prices by a small margin when it was positive. However, the consensus seems to be that higher feedback means more sales and higher margin.

That makes sense but may not hold true in all cases. There are times where reviews on Marketplace sites like Amazon may be harmful. However, the downcast vote may reveal a more profound understanding for the buyer. For example, the person may have complained that a battery pack was not part of the deal. The next buyer who sees that feedback may already know this crucial fact and ignore the negative feedback in its entirety. Amazon, in particular, has many bestselling products with quite a few poor ratings.

A certain amount of negative reviews are expected, even for top-quality products. There’s no avoiding it in the real world, and people expect there to be some present. Most likely, they’ll read the reviews, and it will help them make a final, balanced purchasing decision. If the feedback were entirely positive, the result would probably be that the person was suspicious of the positive reviews.

Recent Study Shows Correlations Between Positive Ratings and High Sales

Another recent report from the School of Management, Guangdong University of Technology, took a look at purchasing habits for 400 shops on Taobao. What the researchers determined was that positive reviews were necessary, but picture reviews and excellent descriptions also were crucial factors. Curiously, they also found out that moderate and negative ranking factors did not hold as much correlation. Therefore, it seems likely that current behavior follows a similar pattern to what many suspects.

Customers want information to decide on whether to make the purchase. They look for pictures and videos of the product in use, positive reviews, and respond well to well-written descriptions. The eWOM is a determining factor, but the most reliable correlation comes when a positive review, well-written copy and a well-chronicled image collection appear together. As expected, excellent sellers should strive to offer a superior product experience, and their digital assets should reflect professionalism. If they do that and get trustworthy ratings and reviews, they have an edge.

Additional Information Is Gaining in Popularity

Most marketplaces now offer ways for users to upload reviews and pictures to bolster their reviews. These carry high value because they allow for precise explanations of why a customer may complain or what they love most about a product. Those type of expository materials add value and help the purchases decide because they offer supporting information. A complaint about how something doesn’t work with an explainer video has an impact, and so do the ones where people show the product working for them.

This type of feedback has become so valuable in the buying process, that most merchants offer incentives to customers for their contributions. The explosion in online shopping means data collection is increasing exponentially. Part of that is ratings and reviews, which add context for those who are looking for a conclusion to their research.

A study by Assistant Professor Ali Yayli of Gazi University looks at reviews in great details. It’s not enough to mention that a consumer’s report was positive or negative or neutral. People now also consider relevancy and timeliness when discussing the merits. Some even insist on consistency across several reviews. Studies need to isolate each of these moving pieces to reach further conclusions. Yayli breaks down the research and paints the picture of sophisticated shoppers who know what they’re looking for when it comes to eWOM.

Shoppers Value Reviews on Trustworthy Sites

Buyers now also judge the general trustworthiness of the site. In a sense, the most favorable reviews tend to be on an authoritative website, are recent, and help put the purchase in a proper context. Supporting materials, such as demonstrations, and testimonials also help boost sales. Companies that sell online are aware of these conclusions and are continually seeking to boost participation from customers. As they do, the overall quality of the data set improves and so does the trustworthiness.

An emerging trend shows four primary factors in product ratings and reviews that are helping to drive sales.

  • Recency – The newer, the better
  • Consistency – Do product reviews and rating touch on similar themes?
  • Supporting materials – There’s an increasing emphasis on image galleries, video uploads, and explanatory material that helps the general review.
  • Authority – Is the site itself authoritative? If shoppers can trust the review system, they place more value on the feedback.

Word of Mouth continues to evolve as eWOM. All products and services online experience it. The average internet user is comfortable leaving feedback and using it for research. As their behavior grows, they are now expecting even more detailed data and expect recency. Stale or outdated reviews may indicate a drop in sales, or they may be the result of it happening. It’s worth it for vendors to stimulate ratings to keep their listing active and selling.

Marketplace websites will continue to improve credibility and bolster their policies. Many now have “Verified Purchase” badges that identify the person is reviewing a confirmed purchase. These sites also offer ratings and direct replies to other’s reviews. That means anyone can refute or expand on one, adding more value to the information chain.

9 out of 10 Internet Users Trust Reviews

Constant Contact said that 90% of internet users use reviews as part of their decision-making process. With such a wide footprint, the area receives a lot of attention for e-tailers and small businesses. This study shows that people don’t just take into account marketplace and website reviews, they also place weight on social media reviews. Facebook and Twitter pages collect feedback which also influences purchasing in a multi-channel environment.

All of this eWOM continues to have a profound impact on digital sales, which grow year after year. The trust that comes from the overall ecosystem of feedback plays a central role in ensuring confidence. People are well aware that these systems are not perfect, but they do a good enough job of answering fundamental questions. They help surfers save time, and they allow vendors to increase sales based on merit. The products that gather the highest number of reviews will continue to sell well, and most likely continue to gain more positive feedback.

Recency and In-Depth Reviews Are Gaining Traction

A virtuous circle of feedback and product quality keeps listings alive and ranking. A review of the studies shows that people still love favorable ratings, but they’re going a great deal more into depth to research. Videos and images impact them powerfully, and they also do a deep dive into reviews looking for supporting or detracting information. When an entire picture of the product becomes clear, they’re able to purchase with confidence.

Product research is a fundamental process in the digital space. The means and methods are evolving, and the amount of data is expanding. It’s likely that shoppers will continue to look at eWOM as a final step when buying. Negative feedback is never good, but some of it is unavoidable. Companies that focus on accumulating fresh, positive reviews gain an edge over those who have stale, or negative ones. It is worth getting new, positive comments to overcome the older ones. That strategy aligns with modern research and could be a fast way to boost sales, especially for business managing multiple listings.