Business Ethics / Organizational Strategy

How Incentivized Reviews Changed E-Commerce… and Were Then Banned

jeff-bezos-amazon-startup-advice

Amazon has changed the way the world shops, and the way it does business. Okay, I get it, that’s the most obvious statement I’ve ever made on this website. Maybe we should just change my title from president to Captain Obvious. However, it never ceases to amaze me how often Amazon’s presence causes marketplace alteration, whether Jeff Bezos intends for it to or not. For the change I’m going to talk about, I’m sure Bezos didn’t intend it.

Earlier this month, Amazon banned incentivized reviews, which refers to reviews where a company gives its product to consumers for free or at a discounted rate in exchange for “honest reviews.” These are not technically “fake reviews” because the reviewer does use the product. However, a recent analysis shows that these reviews tend to be inflated and biased.

Recently, ReviewMeta – a site dedicated to analyzing the validity of reviews associated with products – revealed findings from its analysis of seven million products, showing that incentive reviews tend to skew the overall review score of products on Amazon.

To obtain a full breadth of the research, I do highly recommend reading the full research, and watching the site’s viral video. But for a quick rundown of the statistics, on average, incentivized reviews rated the product 0.38 stars higher than non-incentivized ones, which may seem low, but the non-incentivized average of 4.36 is in the 54th percentile of review scores, while the incentivized average of 4.74 is in the 94th percentile. 4.4 is the mean score. Incentivized reviews are twelve times less likely to give one star than non-incentivized, and are four times less likely to leave a critical review in general. Arguably the most alarming finding is that incentivized reviews now make up the majority of new reviews on Amazon, compared to just two percent two years ago.

Incentivized reviews have taken off over the past couple years due, in large part, to third party sites, often referred to as “review clubs.” Companies pay these sites money to advertise their products to eager reviewers and facilitate the exchange of reviews for free and discounted products. Regardless of your view on this new way of doing business, you have to give credit to some of these websites for capitalizing on a totally new way of shopping.

screen-shot-2016-06-28-at-11-39-54-am

Yellow represents non-incentivized reviews and orange represents incentivized, which made up about half of all Amazon reviews for the past year.

It really is no secret that our way of shopping has changed drastically since the rise of Amazon. Whether you’d like to admit it or not, reviews have become arguably the most important decision-making factor of online shopping. Many companies realize this, and have clearly added reviews as an element of consideration in their marketing strategies. Reviews are important for all online companies, but they’re especially important for new companies and companies releasing new products. It takes time for reviews to appear organically, and without a high number of reviews, many consumers will cease consideration of buying the product altogether.

Now, it’s also easy to see that companies interact with these review clubs in the hopes of compiling high numbers of strongly positive reviews. After all, when the average product listed on Amazon has a 4.4 rating, there’s not a lot of room for subpar, or even average, reviews. Much of ReviewMeta’s research shows that incentives within these sites exist to give positive reviews, regardless of one’s experience with the product.

The idea that Amazon’s product reviews are not completely unbiased is really no longer a secret at this point. Even if you haven’t read or looked at reports of incentivized reviews prior to now, chances are you’ve seen countless reviews on Amazon disclosing that they were given the product for free and at a discount in exchange for an honest review. With this becoming a rapidly increasing trend, Amazon’s sweeping decision to ban this type of review seems wise.

Sources:

http://reviewmeta.com/blog/analysis-of-7-million-amazon-reviews-customers-who-receive-free-or-discounted-item-much-more-likely-to-write-positive-review

http://reviewmeta.com/blog/the-fundamental-problem-with-review-clubs/

http://www.bbc.com/news/technology-37551069

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s