Several authoritative sites have recently implemented the ability for users to post their own reviews, including Google Maps for local businesses. There has been quite a lot of blog talk lately about how user reviews and ratings affect online store sales and site conversions over a period of time. A few questions that our readers have asked relate somewhat to this topic, however we have never really seen revealing reports about the affects of user generated rating and reviews until recently (or there have been and it’s being revived due to user response lately). The overwhelming success of Wikipedia has shed a lot more light on this subject and shows us that people are now looking for authoritative information generated by other users online, not in books or encyclopedias.

User reviews are good for eCommerce enabled sites for many reasons but mostly due to the fact that a large majority of online shoppers are beginning to trust what other consumers think about the products and services they buy and the customer experience they had with the merchants who sell those items. In the past, online buyers have sought out more traditional ways of conducting product research and weren’t as likely to search online for user reviews before actually buying.

eCommerce Product Reviews Overview:

I have managed several eCommerce sites with features that allow customers to rate or review products they have purchased. One of the sites I work with regularly has several incentives and contests over the course of year to get their new and existing customers to review their products or the shopping experience. They then post those reviews alongside related items in their catalog so other users can see them while shopping. When a potential customer adds an item to their cart and sees there are reviews on that item, they will generally read at least one of them. If the review is positive it may reinforce the impulse to buy that items right then and there, if the review is negative the sale is less likely.

Reviews generated by store users also helps to reinforce your marketing strategy within search engines and should be considered as a part of your catalog design and layout, depending on the products you sell or the customers you target. Allowing customers to review items can increase conversions, keeps content fresh and updated on landing pages and adds additional textual content relevant to what you sell. The reviews might also include keywords that you haven’t targeted before that suddenly you end up ranking for on Google. In addition, there are several bonus benefits of adding reviews into your eCommerce buying and check out processes.

User reviews might not be the newest trend in eCommerce usability and design, but it certainly is making a comeback lately and is quickly being implemented by many of the top 500 merchant retailers. Now the only thing we have to worry about is controlling what users write in their reviews. It’s getting more difficult to determine whether some are actual user reviews or just regular spam similar to blog comment spam.

eCommerce Product Review Success Stories:

JC Whitney - Aftermarket Auto Parts & Accessories

JC Whitney took some time to share how implementing user reviews into their online store affected sales, mew customers, repeat buyers and rankings. Geoffrey Robertson, eCommerce VP at JC Whitney, reported that it takes hard work through contests, prizes, email campaigns and other creative means to get quality user reviews for the majority of the items in their catalog. The reviews apparently had little or no affect on user retention, repeat customer purchases or organic search rankings (they didn’t move up or down drastically in the organic search listings).

JC Whitney’s Rating Scale is 1-5 Stars

• Items rated 5 stars saw 16% revenue increase
• Items rated 4 stars saw 8% revenue increase
• Items rated 3 stars saw 10% sales decrease
• Items rated 2 stars saw 23% sales decrease
• Items rated 1 star saw 31% sales decrease
• There was no data for items with 0 stars

This tells me that JC Whitney’s customers really trust what the other store users think. The items with the highest star ratings were purchased more and the items with the fewest stars were purchased less. Merchants would have to be careful with this. I am not sure if they expected them to decrease sales for any of their products. Even though sales on some items decreased, the reviews can greatly help them choose which items to concentrate on in their marketing campaigns and which products to cross promote on their catalog. It also got their most popular products to sell better. With time they may even be able to remove products that would have otherwise cluttered up their catalog and site pages.

JC Whitney reviews stats and information via Marketing Pilgrim

PetCo - Animal Supplies & Pet Products

PetCo recently reported that the implementation of customer reviews into their eCommerce store in 2005 has now helped cut back drastically on the number of products that customers return (lowered product return rate). Nearly all the items offered in PetCo’s online catalog, that are reviewed by their customers, have a 20% lower return rate, on average than items with no reviews. The interesting statistic is that as the user reviews continued to increase per item, the average return rate decreased even more. PetCo credits the ratings and reviews as being one of the most influential tools that affect buying decisions (similar to word of mouth).

• Items with 50+ reviews decreased returns 65% than for items with no reviews
• Cost savings attributable to the lower return rates have been considerable
• Increased email click-through rate by a factor of five when reviews were included
• Items rated 4 or 5 stars saw 49% higher conversion rate than items without reviews
• Searches sorted by review spent 41% more than other site search sorting options

These numbers look promising for the pet supplies giant. Not only is return rate typically hard to track, it’s extremely difficult to lower without disrupting any daily application processes. Learn a lesson from PetCo, if you find yourself with high product return rates try adding a review feature into your store and see if it makes a difference. Other than decreasing the return rate for items purchased online, they have been able to reap additional benefits from using product reviews in their catalog. It’s apparent that customers are using reviews more and more before deciding to make a purchase.

PetCo reviews stats and information via Internet Retailer

NetShops - Large Selection of Specialty eRetail Stores & Shops

NetShops, in conjuncture with researchers from University of Nebraska, reported that after implementing product user reviews last fall that overall product unit sales increased from past years. Apparently, NetShops believes that by offering user reviews in their network it helps to create a more trustworthy environment and gives customers a confortable feeling while buying from one of their 156 different eShops.

Back in November, NetShops partnered with two researchers from College of Information Science & Technology at University of Nebraska, Omaha, to study the impacts, changes and improvements, if any, that product user reviews might have on sales. The researchers and NetShops staff then compared store unit sales of 546 products in May 2007 to sales of the same items a year earlier. By May, the total number of reviews on NetShops sites totaled 19,500, or about 3 reviews per product.

• 26% increase in product unit sales across 546 items
• Earned back the cost of implementing the reviews within a few weeks
• Gained customer credibility by offering reviews generated by users

NetShops used PowerReviews to help them implement the system within their current platform structure. At this time, NetShops has already made a return on the investment they made to implement the review system and no longer pay and fees to PowerReviews for ongoing support. It pleases me to see sites and bigger networks like NetShops embrace the new era of social media, user generated content and Web 2.0 type thinking. If more eCommerce merchants thought along these lines the Web as we know it would be a whole different place, for the better.

NetShops reviews stats and information via Internet Retailer

Video Product Reviews & User Generated Streaming Content:

Video reviews, A new, more useful and trusted form of user-generated content. Recent study shows that 36% of consumers surveyed validated that video product reviews enhance other forms of product information.

In addition, according to a recent report by Telephia Inc, the number of consumers that subscribe to videos via mobile phones has increased from 3.3 million in early 2006 to 8.4 million in early 2007. Not only that, but revenue generated from mobile video nearly tripled to $146 million from a mere $49 million one year ago.

Streaming video sites have made it easier to turn anything on the Web that used to be strictly text based into something that users can either listen to through an iPod or watch through their personal media player on a computer or other hand held device. The mixture between user generated reviews and streaming media, especially video, was bound to happen sooner or later. Let’s take a look at who’s currently doing video product reviews in the eCommerce world and what impacts they have had on the sites that use them regularly. The important thing to remember when attempting to launch a successful video review or video content campaign where users are supplying the videos is that you plan well and analyze the strategy from all angels. Recently, there have been some attempts made by major brands that have ended up backfiring.

Smarter.com Video Product Reviews - Comparison Pricing, Read Reviews & Buy Online

Smarter launched their video reviews in February 2007 by including thousands of product reviews syndicated from ExpoTV.com Videopinion.

• Video Example 1 (Note: Click icon to watch video) - Apple iPod Video MP3 Player
• Video Example 2 (Note: Click “Cell Phones” to watch video) - Camera Phone in Cell Phones
• Video Example 3 (Note: Click “Compact Digital Cameras” to watch video) - Compact Digital Cameras

Millions of Smarter.com consumers will now be able to see products in action and hear from real consumers about their personal product experiences,” said Daphne Kwon, CEO of Expo Communications. “ExpoTV’s turn-key syndication process allowed Smarter.com to seamlessly integrate our highly-targeted Videopinion product reviews for thousands of products at launch. The video catalog will constantly be refreshed and expanded by ExpoTV’s army of smart, focused consumer creators.

Shopwiki Video Product Reviews - Comparison Shopping With Wiki Buying Guides

Shopwiki launched their video reviews in June 2006 by asking wiki editors to contribute video reviews for cash incentives.

• Video Sample 1 (Note: There are several videos on this page) - Valentines Day Videos
• Video Sample 2 (Note: Click “watch video review” from results) Trilite Bicycle
• Video Sample 3 (Note: Click “watch video review” from results) Hair Dryer

ShopWiki video reviews are a way to duplicate the experience of having a friend guide you through the buying process. This person shows you the features, demonstrates the product and gives you practical advice to assist you in determining whether a product is for you. ShopWiki video reviews also aim to act like a friend (in the form of real users) helping users through the shopping process. These are NOT commercials for products, personal videos or funny skits. Videos should give a focused, objective and informative description of a product or category and they should be of products that benefit from a video review. For example, a video of an individual piece of clothing is not helpful, but a roundup comparing the hottest jeans on the market is.

Conclusion & Final Thoughts

With all the things going on in eCommerce today it’s hard to imagine that there are still eBusinesses functioning properly out there that are managed by just one or two individuals instead of whole teams. There is so much that needs to be monitored and implemented if you hope to be as successful as you possibly can be selling online.

If you haven’t yet looked into a feature that allows you to leverage the power of user reviews I highly recommend you start shopping for something. Since selling online can get so saturated in some markets I wouldn’t want to have one of my competitors be the first to offer product reviews from their customers before I had a chance to. Don’t expect this trend to go away anytime soon, look for it to evolve into more streaming media type reviews.

Update: There is a great list of facts about ratings, reviews and user generated content over at Marketing Pilgrim that I couldn’t help but link to. Greg Howlett has been writing some really good articles on this lately and his latest post on this subject is no different. It’s called “Five More Important Facts About User Reviews In E-tail.” I urge you to take some time to read through these facts. He definitely understands what it takes to make user reviews work for eCommerce store owners and online merchants.