January 17, 2007, 12:00 AM

Negativity about negative customer reviews may be unfounded

While the majority of online consumers use customer reviews during product research, a much smaller percentage of online sellers offer them, according to Forrester Research. But some of e-retailers’ anxiety over negative reviews may be groundless.

Kurt Peters

Executive Editor

 

While the vast majority of online consumers use customer reviews during product research, not very many online sellers offer them, according to new research from Forrester Research Inc. Part of e-retailers’ anxiety with providing reviews is fear they will lose control of their marketing message and subsequently lose sales, the research firm says.

Forrester evaluated 4,000 reviews in the electronics and home & garden categories on Amazon.com and found that some of this fear may be unfounded: More than 80% of the reviews were positive, and the negative reviews generally were considered helpful, as indicated by shoppers.

Customer reviews are fast becoming a favorite tool of Internet shoppers, says Forrester analyst Sucharita Mulpuru, who wrote the report, “How Damaging are Negative Customer Reviews,” with Carrie A. Johnson and Peter Hult. Forrester Research concludes 76% of web shoppers use product reviews. What’s more, 81% of the most active web shoppers-consumers who reported spending $500 or more during a three-month period-use them.

However, despite customer adoption of reviews, e-commerce executives continue to be skittish about them: Only 25% of online retailers have incorporated customer reviews of some sort, according to Forrester and Shop.org’s “The State of Retailing Online 2006.” The loss of control over marketing messages and nervousness about hurting sales of hot items with a few negative reviews make many e-retailers quiver. But Forrester’s evaluation of the more than 4,000 customer reviews for 30 products in the two Amazon.com product categories found that much of the fear appears to be unfounded.

Negative customer reviews, for instance, did not strongly correlate to conversion-despite the negative reviews that some products received, most consumers were nonetheless inclined to purchase many of the items, the analysis shows. This is because the items suited very specific needs, or because the items received positive feedback from experts like CNET or Consumer Reports. In the electronics category, for example, 79% of consumers who viewed a product page purchased the item; that figure was 75% even for items not among the top 10 bestsellers in their category, the analysis notes.

On a different note, there can be a positive side to negative reviews. Negative product reviews typically are a byproduct of poor products; as a result, the negative reviews can be an extension of market research efforts, and when read by retailer executives can help drive change and improvement of product design and assortment, the researchers say, citing eBags as an example. The e-retailer creates vendor scorecards that incorporate feedback and data from its product reviews. The vendor scorecards then are used to make buying decisions, such as which items to continue or discontinue, which items to fix, and which vendors to avoid.

 

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