With the global pandemic online shopping has taken a more important part in our lives than ever. Online reviews are critical to shaping the virtual marketplace. Consumer feedback on products – both positive and negative – can dramatically influence consumers’ shopping decisions and firms’ sales. But new research analyzing hundreds of millions of reviews finds that many are extreme and predominantly positive. Oded Netzer, Columbia Business School’s Arthur J. Samberg Professor of Business, argues that the high volume of polar reviews limit the usefulness of such reviews for consumers and potentially distorts the “true” quality of a product. “Due to the law of large numbers when we collect preferences from a large number of consumers we tend to get something that looks like a normal distribution, this is not the case with the majority of online reviews” Netzer says.
Netzer and his co-authors Università Bocconi Assistant Professor Verena Schoenmueller and Professor of Marketing at University of Mannheim Florian Stahl, analyzed over 280 million reviews from 25 major online platforms, including Amazon, Yelp and Expedia. Even though online reviews reflect an aggregate of experiences by a large number of consumers with similar interests, the researchers consistently found that the majority of these reviews show just how selective customers are in the products they choose to review. Using a combination of cross-platform and multi-method analyses, including secondary data, and survey data, they were also able to confirm a higher tendency of consumers to provide extreme evaluations.
The authors found that those with favorable opinions of a product were much more likely to submit a review than those with negative or moderate opinions. They suggest that reviews from reviewers who review a large number of products and are less selective in choosing specific products to review are more representative of consumers’ preferences, and hence are more useful. The authors encourage platforms to encourage reviewers to review more products, to weigh such reviews from frequent reviewers more in presenting the average of online reviews, or at least present to consumers not just the reviews ratings but the frequency in which reviewers review. Until then, the authors recommend for consumers to pay attention more to the number of reviews than to the review ratings, as the former seems to better reflect consumers preferences.
The study’s results have important implications for both the online platforms that aim to host unbiased online reviews and the consumers who use these reviews as a source of information. The research also sets up future studies to look beyond the numbers and analyze the underlying sentiment behind customer reviews.
Read the full study here.
Source: Columbia Business School