Ratings Lead you to the Product, Reviews Help you Clinch it? The Dynamics and Impact of Online Review Sentiments on Products Sales

• Main Authors: HU, Nan, KOH, Noi Sian, REDDY, Srinivas K.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: User-generated content; Online consumer reviews; Sentiments; Ratings; Interplay; Search and choice; Computer Sciences; E-Commerce; Marketing; Sales and Merchandising
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/3509; https://ink.library.smu.edu.sg/context/lkcsb_research/article/4508/viewcontent/Sentiment_Manuscript_DSS.pdf
• Institution: Singapore Management University

It is generally assumed that ratings are a numeric representation of text sentiments and their valences are consistent. This however may not always be true. Using a panel of data on over 4000 books from Amazon.com, we develop a multiple equation model to examine the inter-relationships between ratings, sentiments, and sales. We find that ratings do not have a significant direct impact on sales but have an indirect impact through sentiments. Sentiments, however, have a direct significant impact on sales. Our findings also indicate that the two most accessible types of reviews - most helpful and most recent - play a significant role in determining sales. This suggests that information that is easily accessible and cognitive effort-reducing heuristics play a role in online purchase decisions. This study advances our understanding on the inter-relationship between ratings, sentiments, and sales and sheds insight on the relevance of ratings and sentiments over a sequential decision making process.