A single data point can influence product success
The Fateful First Consumer Review
Sungsik Park, Woochoel Shin, and Jinhong Xie, 2018, 18-106-04
While extensive research has demonstrated myriad benefits of user-generated product information, in this study Sungsik Park, Woochoel Shin, and Jinhong Xie identify a crucial weakness of such information—“information availability” bias. They provide theoretical and empirical evidence that this weakness leads to a surprising “first-review effect,” under which a product’s first consumer review has the power to influence subsequent reviews (and the fate of the product) long into the future.
They demonstrate the significance of this first-review effect using data from multiple product categories and multiple platforms. For example, more than 30 percent of vacuum cleaner models simultaneously offered by both Amazon and Best Buy receive first reviews of opposite valence on the two platforms. Both the average review rating and the number of reviews are significantly lower on the platform with a negative first review than on their counterparts with a positive first review (on average, 0.60 fewer stars and 25 percent fewer review postings, respectively).
More strikingly, a negative first review harms the average review rating even after 36 months, and the damage of a negative first review on the number of reviews increases, rather than decreases, over time.
The data from Amazon also show that the first review rating is not correlated with product quality, which implies that a high-quality product has a considerable chance of receiving a negative first review. As a result, a single review may destroy a good product’s chance of market success, which injures all parties involved: the seller, the platform, and consumers.
The surprisingly persistent and increasing first-review effect is fundamentally driven by a basic property of consumer reviews: without sales, there can be no reviews. Consequently, when a product receives an unfavorable first review, it not only suffers low initial sales but also loses the opportunity to generate a viable number of reviews in the future and thus, the opportunity to correct any potential negative bias of an initial review via subsequent reviews. This information-availability bias forms a mechanism to transfer a disadvantage from a product’s first review to a long-lasting and even increasing disadvantage in future word-of-mouth information.
In an era where management’s attention is increasingly turning to big data, this study demonstrates the influence of a single data point (the first review) on product success. Given the significant power of this first review effect, firms will need to develop strategies to manage it. The authors offer the following suggestions:
- Vigilance: Closely monitor online platforms to detect when a product’s first review is posted on each.
- Quick response: Take action to facilitate WOM as soon as an unfavorable first review appears.
- Encourage early reviews: (e.g., participate in Amazon's Early Reviewer Program or Vine Program).
- Integrate communication strategy: Recognize the information-availability bias of user-generated information and integrate firm- and user-generated information into an effective communication strategy.
For online sellers/platforms:
- Facilitate early reviews (e.g., offer a platform-initiated review incentive program, such as Amazon's Early Reviewer Program or Vine Program).
- Link to consumer review metasites (such as ConsumerReview.org) that combine consumer review information from multiple sources).
Sungsik Park is a doctoral student, Woochoel Shin is Associate Professor, and Jinhong Xie is Professor and J.C. Penney Eminent Scholar Chair, all at the Warrington College of Business, University of Florida.
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