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Frank Reynold

Impact of Consumer Reviews’ on E-commerce Business

Frank Reynold

Sometimes when we want to buy something we are not used to, we get lost and wonder what to choose from the large list available in the market. In such cases, people usually tend to ask someone they know for a recommendation. This experience is still relevant in online shopping. But instead of asking friends and relatives about recommendation, people now turn to reviews to learn from others’ experience.

Reviewers have become one of the first things an online customer would look for before making a purchase. With the quick spread of information, people share their purchase experience with others, bad or good. In some cases, customers search for reviews even before checking the product.

Importance of reviews and how they impact the purchase decision has become subject to a lot of scientific studies. Reviews in eCommerce have taken the position of word of mouth concept known in old marketing and how other’s opinion affects trust and purchase decision.  

A group of researchers from Manning School of Business University of Massachusetts Lowell, Department of Operations and Information Systems, has led a new study to investigate the power of reviews or what the researchers referred to as “power of crowd”.

In recent years, reviews have proliferated and become one of the main factors of business trust and ultimately purchase decision. That’s why businesses should pay much attention to the user experience, and keep track of their reputation online. As stated by the study which is published in a Journal of Internet and e-Business Studies “Ensuring trust and maintaining popularity has a big impact on the future sales of businesses.”

The impact of word of mouth was restricted to person to person or to a small group of people, but the impact of reviews now has gone broader. Researchers stated that “The technology makes the cost of distributing information cheaper and more efficient. In online markets it breaks time and geographical boundaries for online shoppers”.  

Always, the challenge of business success is trust, and e-business isn’t an exception. “When consumers make transactions online or explore a website, more often than not they do not know the persons or vendors they transact with. E-commerce brings challenges into the traditional trust constructing processes… Trust plays a key role in business-to-consumer (B2C) and business-to-business (B2B) online transactions, which affects the success of business for Web vendors.”

Online customers would imitate a customer’s experience. Thus, reviews then affect the consumer buying behavior and help the customer make informed consumer purchasing decisions. As stated by the research “Other consumers benefit from these evaluations and can now make better informed decisions about the sellers and the products they sell.”

 Researchers stressed out that “Consumers are frequently influenced by online reviews and tend to mimic others’ behaviors. Group mimicking behaviors refer to the situations in which people include information from users’ behaviors and disregard their own information when they make decisions.”

As a business, you don’t complete hand on your reputation, but consumers make it. The study showed that “The opinions of consumers on the trustworthiness of sellers and the quality of product can be formed by online reviews. It implies that the popularity of a product or service can generate potential sales and revenues.”

To understand the effect of crowd on trust, researchers have taken hotels as a sample to study. They found that “the popularity of a hotel is positively correlated with the size of crowd following the business, and also impacted by other factors, such as price, location star levels, etc.” Yet, they mentioned that “5 star hotels are not necessarily more popular than 4 star hotels, and 4 star hotels are not more popular than 3 star hotels…and so on so forth… We find that the popularity of a hotel can be explained by consumers’ satisfaction on hotels’ value, location, and cleanliness.”

For online business, word of mouth has been changed to reviews. Business reputation and customers’ purchase decisions are impacted by others feedback and shopping experience. So, for a successful online presence, businesses should not ignore reviews and they should invest in improving any poor experience mentioned by users.

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