Impact of online word-of-mouth on sales: the moderating role of product review quality

Abstract

ABSTRACTFacing with thousands of online product reviews, consumers usually pay close attention to those valuable ones which provide more specific and credible evaluations on products. Whether a close association exists between product review quality and sales is thus examined in this paper. By employing text mining techniques on multiple review features, a review is measured as one of the following two levels: high-quality or low-quality. In doing so, aggregate quality level of product’s whole reviews is also identified. Then, a two-level econometrical analysis is conducted on the real datasets from Amazon.cn. The results reveal that aggregate quality level of positive reviews and negative reviews interactively influence sales. In the situation the aggregate quality level of positive reviews is high meanwhile that of negative reviews’ is low, product sale is the highest, while in the opposite situation product sale is the lowest. The results also reveal that consumers understand product’s value from weighting positive and negative reviews of high-quality level, which then positively relates to product sales and exerts a dynamic effect on sales by the moderating role of product selling stage and popularity. The paper innovatively integrates the quantitative and qualitative characteristics of reviews to estimate their economic effect.