Public Relations & Social Marketing Insight

Product returns are a costly problem for retailers. It has been estimated that U.S. customers return a hefty $264 billion worth of products annually—almost 9% of total sales. In online retailing, return rates are an even bigger problem. A 2013Wall Street Journal article indicated that as much as a third of internet purchases are returned, and studies have found that handling these returns can cost between $6 and $18 per item.

In online retailing, most products are returned because customers aren’t satisfied with what they get—but this isn’t necessarily due to product defects. Because customers can’t physically evaluate and test products before purchasing them, it’s harder for them to set the right expectations, and easier to be disappointed by a product. This is why retailers provide information—product descriptions, pictures, and videos—to help customers make more informed purchase decisions.

This is also why online customer reviews have become such an important source of product information. These are typically characterized by the average star rating (“valence”), the number of reviews (“volume”), and the variance in star ratings (“variance”). Since online reviews affect people’s likelihood to buysomething, we wanted to test whether reviews also influence their likelihood to return it....

Each time consumers glance at an online review and then click the item in question into their shopping carts, we see the transformative powers of e-commerce reviews—namely, how first-person insights and recommendations dramatically influence purchasing decisions.

At the same time, we also observe another lasting effect of e-commerce reviews—the profound impact they've had on how today's consumers actually shop.

At Influence Central, we conducted a research study of 500+ women consumers that looked at how online product reviews influence shopping habits, whether consumers trust online reviews, and how recommendations affect purchasing decisions....

I recently read an interesting study posted by Myles Anderson on Search Engine Land that said 88% of consumers who read online product reviews trust the reviews as much as personal recommendations. The important caveat to this statistic, as noted by Myles, is that there must be multiple reviews on a product for this to apply, and those reviews must appear authentic.

Amazon’s recent lawsuit against fake reviewers throws this phenomenon into sharp relief. The company is targeting over 1,000 fake reviewers who have posted fraudulent reviews in exchange for financial compensation. Despite Amazon’s use of artificial intelligence and machine learning to combat fake reviews, there is still a growing market for writers willing to post fake positive (or negative) reviews on the site. Amazon has struggled with this challenge for years now, and deserves credit for working to build the trust of customers and prospective buyers.

This kind of trust issue can have serious financial implications for big brands. Canadian wireless network operator Bell was recently issued a fine of $1.25 million when it came to light that Bell staffers were writing and posting fake reviews on app download sites.

All these stories get me thinking. In the world of online product reviews, trust is key. Whose opinions do buyers actually trust? More importantly, whose opinions should they trust?...