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Journal of Seybold Report ISSN NO: 1533-9211

A Qualitative Analysis on the Impact of Consumer Reviews on Buying Decision over


E-Commerce Platforms
Dr.NiteshBehare,
+91 8446220482, beharenb@gmail.com
Associate Professor, Balaji Institute of International Business,Tathawade, Pune, India
Dr. Puja Bhardwaj
+91 9420731007, drpujabhardwaj@gmail.com
Pravara Centre for Management Research and Development, Pune, India
Dr. Reena Lenka
+91 9960848498, prof.reenalenka@gmail.com
RL Consultancy, Pune, India
Sandeep Gadkari
+91 9822019854,sandeep_gadkari2004@yahoo.com
Neville Wadia Institute of Management Studies and Research, Pune, India
Abstract
In today’s e-commerce businesses, products’, ratings and reviews are prevalent tools to
support consumers buying decisions. At the same time these ratings and reviews are also
significant for online retailers, who use these systemsof feedback to gain trust and reputation
on e-platform. This literature study examines the influence of ratings and reviews with
respect to e-commerce transactions. To gain more detailed insight, the literature hasgiven
detailed attention to examine how products’/services’ ratings and reviews moderate the
influence of online consumer reviews in various industries. This literature also
respondsproficiently to the customer reviewsbusinesses needs to categorise consumer reviews
to understand their physiognomies and regularlyevaluate their influence on consumer
purchasing decisions. In this paper the researcher’sconcise similar data to understand the
significance of products’/services’ ratings and reviews in the consumers’ buying decision.
This literature study on products’/services’ ratings and reviews will give new dimensions for
future research in the area of user ratings and reviews.
Key Words: Ratings and reviews, e-word of mouth, Customer experience (CX), e-Feedback
Introduction
Since ancient time human being has experienced various trade practices of business. It was
started from barter to monetary exchange to tele-business to digital era. In today’s digital era
the business platforms are made user friendly considering the convenience of the customer.
Or in other words, foremost edge for today’s business is e-trade. It was started with the online
shopping which is also known as e-commerce which internet made it possible. But now days

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because of the revolution in the mobiles devices, e-commerce business slowly shifted from e-
commerce to m-commerce. Prior to digitalization era, traditional business were also affected
by references and recommendations from the existing customers. Many times ‘word of
mouth’ was playing an excellent role. But these days customer are reviewing and sharing
their experiences. It is very crucial for the business to understand how people make online
purchasing decisions. According to the reports from www.statista.com, a global B2C e-
commerce sale in 2016 reached to 1.92 trillion U.S. dollars. Where desktop (e- commerce)
shopping amounted to over 143 U.S. dollars and mobile shopping (m-commerce) averaged
around 114.52 U.S. dollars 1. In 2021 it is expected to grow by 4.88 trillion US dollars.
Another research suggested that overall e-commerce is dominated by younger and middle-
aged consumers, whereas old age consumers (55-year-old and older) are increasingly
purchasing goods or services online. This may be due to easy access of the technology which
has also helped in understanding the changes in how we consume and interact with brands.
The Millennial and Generation Z – those who are born between 1980 and now – have grown
up with social media, smartphones, online shops. As the population in this group is very
large, hence their desires and demands to a large extent governs how any brand should
represent themselves in both numbers and spending power.
Almost every e-commerce businesses are focusing on customer feedback and reviews as
customers are considered to be the eye and ears of the organizations. The consumer reviews
on online decisions is widely recognized. Many studies have suggested that ratings and
reviews from the consumers’ impact people’s buying behavior and the attitudes towards
products and retailers. Hence the satisfaction and optimal gratification of the customer is
more important and will be worth more by 2030. This development towards the change
process and consumer attitude through e-shopping has great significance for the design of
transport, logistics, and retail.
Worldwide e-commerce market (India and Abroad)
a. Domestic e-commerce Market:
The e-commerce has transformed the Indian traditional business system. By 2026, e-
commerce market of India is projected to grow by US$ 200 bn as compared to US$ 38.5 bn
in 2017. Industry experts give credit to increasing consumption of internet and smartphone
penetration in both rural and urban area. The digital revolution is likely to intensify nation’s
total internet user to 829 million by 2021 from 560.01 million in Sept 2018. By 2020, the
internet economy is anticipated to be double folded from US$125 billion in April 2017 to
US$ 250 billion, which is majorly receded by ecommerce and considering the annual growth
rate of 51% which is highest in the world, revenue is expected to rise from US$ 39 billion in
2017 to US$ 120 billion in 2020. Propelled by intensifying penetration of smart phone, 4G
infrastructures and increasing disposable income, e-commerce market of India is estimated to
grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017. Online retail sales in India
are expected to grow by 31 per cent to touch US$ 32.70 billion, led by Flipkart, Amazon
India and PayTm Mall(S.H., 2018).

1
https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/

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According to IBEF, in 2018, electronics goods are the biggest contributor to online retail
sales with a share of 48 %, followed closely by apparel at 29 % in the domestic
market.(IBEF, 2019). According to (ET, 2019)world’s fastest growing e-commerce market
(i.e. India) will touch USD 84 billion in 2021 from USD 24 billion in 2017 because of
vigorous growth in organised retail sector whereas Indian retail market is estimated to grow
USD 1.2 trillion by 2021 from USD 795 billion in 2017(ET, 2019).
There are few key advantages for e-commerce in Indian market as mentioned below:
• Growing demand
India is the fastest growing market in e-commerce sector. Revenue from the sector is
expected is expected to increase from US$ 39billion in 2017 to US$120billion in
2020 with 51% global highest growth rate.
• Attractive opportunities
A lot of India’s blue-chip PE firms are looking for opportunities in the sector
• Policy support
100% FDI allowed in B2B e-commerce, 100% FDI under automatic route is
permitted in market place model of e-commerce
• Increasing Investment
E-commerce and consumer internet companies in India received more than US$
7billion in private equity and venture capital in 2018 2
b. Global e-commerce Market
Purchasing online has become a usual practice amongst several around the globe. There are
many reasons for such purchases. Some may choose it for convenience, others may choose
because of the competitive price and some may choose due to offers and discounts. Online
buyers may also be influenced by the availability of variety of online resources at the time of
shopping, such as customer ratings and product reviews. On the other hand financial service
providers are also giving helping hand to online buyer by encouraging digital payment.
Among all the digital payments, PayPal is the favoured payment method amongst online
shoppers globally.
Following timeline exhibits the projection of digital buyers globally from 2014 to 2021. In
2021, according to the reports, over 2.14 billion global customers are likely to buy online,
which has increased from 1.66 billion global digital buyers in 2016(J. Clement, 2019).
According to the reports, global e-commerce sales in 2017 amounted to USD 2.3 trillion and
it is expected to rise to USD 4.88 trillion in 2021. The revenue of top 3 online stores' is
equivalent to USD 100 billion in 2017. Though online shopping is globally popular but the
usage varies by region – viz a viz, in 2016, an estimated 19 percent of all retail sales in China
occurred via internet but in Japan the share was only 6.7%.(J. Clement, 2019).
Research Question
RQ 1: Does online reviews of the products influence the frequency of buying in an
online purchase?

2
https://www.ibef.org/industry/ecommerce.aspx

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RQ 2: Does consistency of online reviews affect consumer purchase decision?


RQ 3: How important reviews are for the sellers on the online platform?
Methodology
For this study researcher has taken reference of various research studies, reports of various
related organizations, experts opinions as well as various other online literature. The Scope of
this research paper is limited to the studies conducted on consumers’ feedback and/or
experience and/or reviews and/or ratings.
Literature review
Normally, customers collect quality information before buying any product/services. With the
growing popularity of the Internet, online consumer ratings and reviews become an
imperative source of information for the consumers who are seeking to ascertain quality of
the product. A study done by (comScore, 2007), found that 24% of users analyse digital
reviews before recompensing for a service delivered offline. Consequently, number of
businesses istaking benefits of online consumer reviews as anemerging marketing tool
(Dellarocas, 2003). Many studies have also shown that companies not only often post their
information of the product and sponsor promotional chats on online forums, like USENET
(Mayzlin, 2006), but also enthusiasticallyencourage their consumers to share their experience
about their products online (Godes, 2004). Even some companieshave deliberately
manipulated online reviews to influence consumers’ purchase decisions (Chrysanthos, 2006).
On the other hand, (Nan Hu, 2008) directed that consumer’s online product reviews, who has
previously purchased any product have become a keysource of information for consumers
and marketers concerning a product quality. This study incorporatesprevious researches by
leading a more substantial test of the effects of digital reviews on sales. Specifically,
researcher took both qualitative and quantitative reviews, such as, product coverage, reviewer
quality, reviewer exposure and temporal effects.(Zhao, 2015). By using transaction cost
economics and uncertainty reduction theories, in the research the author had adopted a
portfolio approach to quantify the efficiency of the online review market. The author had
revealed that many consumers always understand the difference between unfavourable and
favourable news and accordingly they respond. Moreover, when buyer read online reviews,
they not only consider scores but alsopay attention to the other “contextual information”,
because we all know that market reacts more constructively to the reviews. It was also found
that impact of online reviews on sales moderates over time, which also suggests that
companies need not provide incentives tobuyers to write reviews beyond a definite time
period after products have been unconfined.Using the exponential learning curve model
(Georgios Askalidis, 2016) has studied the impact of consumers’ bulk reviews on the
purchase likelihood of users. The researcher also accepted that variance in conversion rate
between the product with no reviews and an infinite number, the likelihood of a product can
increase by 142% as it accrues reviews. It is also found that, within different categories, the
significance of products’ reviews was highest for Electronics (i.e. increase of 317%) followed
by Home Living (i.e. increase of 182%) and Apparel (i.e. increase of 138%). The researcher
also concluded that existence of reviews offers valuable indications tothe customers to

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increase their inclination towards the purchase. Also it is found out that buyersnormally don’t
pay attention to the entire set of reviews, especially if there are lots of reviews available,
instead they emphasize on the first few available(Georgios Askalidis, 2016). The valuable
inputs given by Spiegel Research Centre, a marketing research company suggests that online
reviews play asignificant role in customers’ buying decision, not only in the food and
nutrition markets, but also across all industries. The company also indicated that products
with reviews are 270% more likely to be bought than products without reviews.
Furthermore, Testimonial Engine, on the other hand, found that 72% of buyers will wait till
they’ve read all reviews before taking a purchase decision.(Intelligence)
According to research done by Mr. Khalid Saleh, CEO-INVESP, suggested “How important
are customer reviews to shoppers?(Saleh) 3 He has given following facts about the
“Importance of Online Customer Reviews”
• 90% of consumers read online reviews before visiting a business whereas 88% (Saleh,
n.d.)of consumers trust online reviews as much as personal recommendations.
• Customers are likely to spend 31% (Saleh, n.d.)more on a business with “Excellent”
reviews and 72% say that positive reviews make them trust a local business more.
• 92% (Saleh, n.d.)of the user will use a local business if it has at least a 4 star ratingand
72% (Saleh, n.d.)of the consumers will take action only after reading a positive
review.
• Expertiseopinion (21%), Reliability (27%), and professionalism (18%), are the most
significant reputation traits for local businesses (Saleh, n.d.).
• 86% of the people hesitate to purchase from a business which has negative reviews
(Saleh, n.d.).
• On average a one star increase on a yelp leads to a 5-9% increase in a business’s
revenue, one negative review cost you 30 customers(Saleh, n.d.).
(Askalidis, 2016)In their research revealed that reviews given by verified buyers of the e-
platform are considerably more positive than reviews written by anonymous sources.
Whereas (Kim S.J., 2017) in their research suggested that displaying reviews written by
verified buyers – which can be identified by a “verified buyer badge” – has a significant
positive impact on sales. Because the verified buyer badge indicates that reviewer is anactual
consumer and not someone who was paid to write a review or someone who has an axe to
chore against the company. In this situation the purchase likelihood increases by 15% even
when consumers who are uncovered to reviews written by a verified buyer vs. an anonymous
review 4
According to (Askalidis, 2016) displaying reviews can upsurge conversion of sales by 270%.
The researcher further added that when the price of the product/service is higher, the risk
involved in the consumer’s purchase decision is quite high. Whereas having more
information through reviews which helps toalleviate that risk.On the basis of the data from
various retailers, when reviews were displayed for a lower-priced product, the conversion rate

3
https://www.invespcro.com/blog/the-importance-of-online-customer-reviews-infographic/
4
https://spiegel.medill.northwestern.edu/_pdf/Spiegel_Online%20Review_eBook_Jun2017_FINAL.pdf

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increased 190%. Conversely, for a higher-priced product, the conversion rate increased to
380%.(Askalidis, 2016)(Malthouse E.C., 2017). (Askalidis, 2016)In their research further
added to the research based on the website of the gift sellers, approximately all of the
increase in purchase likelihood happens within the first 10 reviews, and the first five reviews
drive the bulk of this increase 5.
The study of (Zhu F, 2010) confirms that reviews are highly popular among consumers
purchase decisions where98 % ofhis sample population check reviews and 60% do this often
or quite often. Conversely, online consumers’ reviews impact consumer buying decisions
only when consumers’ dependence on online reviews is adequately high when they make
buying decisions. Other similar studies have engrossed on mechanisms of average online
ratings and the characteristics (number, depth or length) of online reviews (S., 2015)(Zhu F,
2010), on the theoretical backgroundsuch as the content or difference of reviews and their
influence on sales or purchasing behaviour(Floh A., 2013). On the other hand, according to
(Nina Isabel Holleschovsky, 2016) qualitative reviews are more likely favoured by
consumers than quantitative ones. The previous are preferred due to its credibility whereas
the later are preferred due to its usability. Overwhelmingly, credibility is the influential
characteristic for reliability in reviews, whereas usability should not be overlooked since it
can also be regarded as significant for platform and review choice.
(Mo Zan & Li, 2015)The results of the research shows that prominent factors of online
reviews on consumer buying behaviourcompriseof description rating, positive reviews,
additional reviews, picture reviews and cumulative reviews. The other four factors such as
negative reviews, moderate reviews, logistics star rating and service star rating are not
substantial in this research. Consequently, in the sales process, the online sellers can take the
motivations of consumers to make positive reviews as well as high quality reviews. The
authors further concluded that buyerscan make purchase decisions quickly based on online
reviews. Similarly it can also help sellers to hold the significance of online reviews, timely
correct theirpaucities and offer a reference for the modification of marketing strategy.
(Dayal, 2016)in their research suggested that businesses uses social media platform in the
social marketing areas, social customer relationship management as well as new business
models. In the present situation social media is a fundamental change where the businesses
uses social media platform to interact with their customers, prospects, stakeholders and their
employees.She also revealed that consumer buying behaviour can be influenced by online
reviews, where numerousaspects like picture reviews, additional reviews, positive reviews,
description rating and cumulative reviews have significant and positive impact on buyers’
behaviour (Mo Zan & Li, 2015).
Consumer purchase decision for the products are centred on online reviews which will be
prejudiced by online product ratings and reviews as they both vary in concept (Georg
Lackermair, 2013). Similarly, on the other hand (Vimaladevi K., 2012)suggested that there
were substantialinfluence of online reviews on buyers’ purchase decision and
buyers’purchase frequency. Also, to some extent, for making buying decision, consumers’are

5
https://spiegel.medill.northwestern.edu/_pdf/Spiegel_Online%20Review_eBook_Jun2017_FINAL.pdf

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dependon many social networking platforms as they have an opportunity to interact with
other consumers and retailers. Ine-word of mouth (eWOM) communications,consumers also
are involved to help other consumers (Li, 2012). Whereas (Murat., 2012) in their study
suggested that online product reviews and ratings are having significant influence on
consumer purchase decision as they have built the foundation for inducingconsumer’s social
and psychological physiognomies. Reliability of characteristics of reviews, usefulness of
reviews, website reviews and reliability of the e-selling platform have a positive effect on
consumer buying decision.
(Zhang, 2010)in his study found that online reviews helpedthe buyers as good source of
information whereasonline searching for product information and online reviews are more
persuasive where buyers have betteronline experience. But the influence of online reviews
may vary from product to product where consumers use the reviews to assure themselves that
products shipped will be same as reviewed(Seegers, 2009).
(Spiegel, 2017)Spiegel research team has analysed millions of buyers’ experiences
specifically from two online retailers containing primarily lower-priced product categories
and high-priced gifts. The company revealed that online reviews have the power to
melodramatically influence consumers’ purchase decisions. But the degree of this influence
depends on many factors, such as1) Price of the product 2) Degree of uncertainty or risk
involved in the purchase 3) Average star rating 4) Presence of negative reviews 5) Number of
reviews
According to the reports from (Fullerton, 2017), 60% of buyersconsider online reviews at
least weekly, another research by Podium suggests that 93% online reviews influencebuyers
purchasing decisions. The way consumer engagement with B2B and B2C business has
evolved exemplifies that before making a purchase decision 82% of buyers read reviews.
Additionally, the study also suggested that 68% of consumers are ready to pay up to 15%
more for the same product or service if they are assured they will have a better experience.
Discussion
However consumer reviews influence the consumers purchase decision but it is alsopossible
that the influence may not be much on actual buying decision. Some factors like frequent
visit on the e-commerce platform, popularity of e-commerce platform and international
popularity ofe-commerce platform havesignificant impact on consumer purchase decision.
However, some factors like negative reviews of product/services, consistency of reviews and
rating and positive reviews and ratingmay not be having much impact on consumer buying
decision. So positive or negative reviews, emotional reviews, and reviews with avatars may
not change the consumers buying attitude whilepurchasing the product/services online.
Conclusion
For conducting this research, the researchers has considered three research questions: Does
online reviews of the products influence the frequency of buying in an online purchase? Does
consistency of online reviews affect consumer purchase decision? Andhow important reviews
are for the sellers on the online platform? After reviewing many research papers we can
conclude that there is a significant relationship between reviews and ratings and consumer

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buying decision. As online customer reviews are the primary sources of product information
and it significantly influences customers’ purchase decision. It is also found that many
customers do not read all reviews instead only first few recent reviews helps them to make
the buying decision. As this is a noteworthy and remarkable thing and companies are also
focusing on improving their products and/or services.
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