Online Reviews and Product Sales: The Role of Review Visibility

Abstract

When studying the impact of online reviews on product sales, previous scholars have usually assumed that every review for a product has the same probability of being viewed by consumers. However, decision-making and information processing theories underline that the accessibility of information plays a role in consumer decision-making. We incorporate the notion of review visibility to study the relationship between online reviews and product sales, which is proxied by sales rank information, studying three different cases: (1) when every online review is assumed to have the same probability of being viewed; (2) when we assume that consumers sort online reviews by the most helpful mechanism; and (3) when we assume that consumers sort online reviews by the most recent mechanism. Review non-textual and textual variables are analyzed. The empirical analysis is conducted using a panel of 119 cosmetic products over a period of nine weeks. Using the system generalized method of moments (system GMM) method for dynamic models of panel data, our findings reveal that review variables influence product sales, but the magnitude, and even the direction of the effect, vary amongst visibility cases. Overall, the characteristics of the most helpful reviews have a higher impact on sales.

Impact of seller- and buyer-created content on product sales in the electronic commerce platform: The role of informativeness, readability, multimedia richness, and extreme valence

“…Although this result differs from the previous study (Ghose and Ipeirotis, 2011), it is in line with the results from other studies, which indicate that more readable texts generate a positive marketing outcome: they are positively associated with helpfulness (Fang et al, 2016;Korfiatis et al, 2012;Liu and Park, 2015;Reinartz, 2016). This discrepancy may be due to the explosive growth of customer review volume in e-commerce platforms in recent years leads to information overload, which forces customers to select reviews to read (Alzate et al, 2021b). In this case, more readable reviews enjoy more helpfulness (Fang et al, 2016;Korfiatis et al, 2012;Liu and Park, 2015;Reinartz, 2016), which consequently leads to more product sales (Kaushik et al, 2018).…”

“…The rationale behind this approach is that the log curves between sales ranking and actual product sales are approximately linear (Chevalier and Goolsbee, 2003). Besides, this approach is also in line with previous empirical studies, in which product sales on e-commerce platforms is the dependent variable (Alzate et al, 2021b;Chen et al, 2004;Chong et al, 2016;Cui et al, 2012;Kaushik et al, 2018).…”

The combinatory role of online ratings and reviews in mobile app downloads: an empirical investigation of gaming and productivity apps from their initial app store launch

“…All independent variables are lagged one day in comparison to the dependent variable to be able to test how changes in ratings and reviews impact downloads, as a causality procedure. A one-day lag was used rather than additional days as related work has found that consumers rely only or to a greater extent on most recent reviews (Li et al 2019;Alzate et al 2021). Inspection of our data set reveals that reviews and ratings change on a daily basis, and along with the aforementioned literature arguments, it motivates the use of a one-day lag.…”

The impact of food delivery applications on Romanian consumers’ behaviour during the COVID-19 pandemic

“…Visibility comprises two items: one referring to the promotional materials related to FDAs (promotion) and the recommendations received from other people who use such applications (also known in the literature as a social influence). Alzate, Arce-Urriza, and Cebollada [ 36 ] discuss the importance of review visibility for the buying decision, a form of word-of-mouth advertising. Boyland et al [ 37 ] analyse the influence of celebrities used in food consumption commercials.…”