Do product reviews really reduce search costs?

ABSTRACT

The literature on online product reviews is based on the fundamental premise that reviews impact search costs and also affect consumers’ confidence in their purchase decisions. However, this proposition has not been proven in the literature. To this end, we conducted an experiment using an eye-tracking machine to measure the impact of online editorial and customer reviews on consumer’s information search costs and on decision confidence. Search costs in this study are defined in terms of time costs and cognitive effort costs. We find that when present, both editorial reviews and customer reviews separately reduce both search time and cognitive effort considerably, but not when present together. We also find that the presence of both types of reviews increases decision confidence considerably, but do not lower search costs. These results suggest that ecommerce firms can benefit from the presence of either or both editorial and customer reviews through either lower search costs, or higher decision confidence. We conclude with several managerial recommendations for ecommerce firms.

KEYWORDS:

• Decision confidence
• ecommerce
• eye-tracking
• product reviews

Funding

This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2015-S1A3A-2046742).

Notes

1. Unlike customer-generated reviews, which may have zero, one, or many reviews linked to a product, usually only one editorial review is provided per product. There are exceptions, although they tend to be on websites that aggregate editorial reviews from multiple sources.

2. For the SINGLES AOI, the OBSLENMEAN is longer when no reviews are present and, as such, does not contradict our finding that search is less efficient without product reviews.

3. We exclude the LOGO and CART AOIs since they are found infrequently in the scanpath. Including them in the analysis does not change the results.

4. The Observation Lengths for each AOI are shown under the OL column.

5. This includes the fixation lengths for the CUSTOMERS, RATING, and BARGRAPH AOIs.

6. This will likely vary depending on the number of reviews available for a particular product, and needs to be explored further in future research.

Additional information

Funding

This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2015-S1A3A-2046742).

Notes on contributors

Naveen Amblee

Naveen Amblee is Associate Professor of Marketing Management at the Indian Institute of Management, Kozhikode. He holds a PhD in International Management from the University of Hawaii at Manoa, and an MSc in Education from the University of Oxford. His research interests are in the field of internet marketing with an emphasis on online word-of-mouth, digital products, and social media. His research articles have been published in the International Journal of Electronic Commerce, Decision Support Systems, and the European Journal of Marketing, among others.

Rahat Ullah

Rahat Ullah is an adjunct Lecturer at School of Business, University of Notre Dame, Australia. His research interests include electronic commerce, economics of information systems, social media, online word-of-mouth, and online product reviews. He holds a PhD from the Korea Advanced Institute of Science & Technology. His research has been published in Decision Support Systems.

Wonjoon Kim

Wonjoon Kim is an Associate Professor at the School of Business and Technology Management, KAIST, as well as President of the Asian Innovation and Entrepreneurship Association. Formerly, he was an Adjunct Assistant Professor in New York University’s Department of Economics and a Research Fellow in the Yale School of Management. His research focuses on strategic management of innovation in the high-tech industry, economics of information systems, social media, and online word-of-mouth. He has received several best paper awards in the innovation area. Dr. Kim’s research can be found in such journals as Research Policy, Decision Support Systems, Scientometrics, Energy Policy, Journal of Strategic Management, International Journal of Technology Management, Technological Forecasting and Social Change, and Applied Economics. He holds a PhD in Economics and M.S. in Material Science and Engineering from Seoul National University.