Five-star reviews may not be key to success for internet retailers

Too many five-star product reviews do not help internet retailers, a new study shows. It appears that excellent reviews increase prospective customers' expectations of the products, which makes them more likely to return them.

The high return rate is one of the main pitfalls of internet shopping, with some marketing studies estimating that about 30 per cent of all products get returned. This is costly for retailers. "Trust reviews are very important in online retail," says David Fitzsimons, chief executive of Retail Excellence Ireland. "They should be used more in conventional retail but for some reason retailers don't want to apply these in store. Trust generally is a huge issue."

The authors, marketing experts from German and Dutch universities, carried out a study of online customer reviews from a main online retailer over several years. They found that glowing reviews usually resulted in more purchases, but also more returns.

The overall effect for the retailer was negative, the authors say. The study will be published in the Journal of Retailing. Most products bought on the internet are returned not because they are defective but because they were not what the customer expected.

The authors used product page views and transaction data from a major European online retailer between 2011 and 2013, including 8,835,645 page views that resulted in 631,063 purchases for 2,164 products in the electronics and furniture categories.

More returns

The analysis showed that highly rated products had an increased purchase probability (9.14 per cent increase for electronics and 14.6 per cent increase for furniture), but also increased probability of return (11.16 per cent for electronics and 10.34 per cent for furniture). The effect of positive reviews was larger on first-time buyers and for less expensive products.

“Our findings encourage retailers to get a large review base that adequately reflects the performances of the product,” the authors say. Reviews should realistically represent the product’s characteristics, both positive and negative.

Vanesa Martinez is on placement at The Irish Times under the BSA/SFI media fellowship programme