6 Reasons Why Amazon Product Reviews Matter to Merchants How buyers and sellers alike benefit from the company's legendary online reviews.
By Jay Lagarde Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Product reviews are a major reason why consumers love Amazon. Where else can you go to read hundreds of candid testimonials -- or complaints -- about every aspect of an item? In this post, we'll show why product reviews matter to sellers, too.
Related: Amazon Is Overhauling Its Reviews System to Make It Much More Useful
1. Consumers love online reviews.
Study after study has shown that consumers are increasingly reliant upon online reviews when making purchasing decisions. In fact, a recent Nielson study found that 70 percent of global consumers trust online reviews, up 15 percent within a four-year period. Industry experts project this trend to further increase in the coming years.
If consumers love online reviews, what better reason does a merchant need? Sellers are in the business of delivering products that customers will rave about. Acknowledging the growing importance of online reviews is the first step toward better understanding the market.
2. Shoppers trust Amazon.
Since the company's founding in 1994, Amazon has openly claimed an obsession for its customers. Amazon's guiding principles even go as far to say: "Although leaders pay attention to competitors, they obsess over customers." With this in mind, one can begin to understand the lens through which Amazon views its millions of users. Free shipping, streaming music, cloud web services, a popular line of tablets and eReaders and the world's largest selection of products have solidified consumer loyalty.
This obsession has paid major dividends, especially in the past few years. Amazon Prime now has over 44 million users, and the company's stock is routinely flirting with $700 per share. For customers, this translates into an ever-improving shopping experience with more reviews and better deals.
3. Amazon actively defends the integrity of its reviews.
For as long as online reviews have existed, people have tried to game the system. Amazon wisely realizes that the integrity of its review system is a major reason why shoppers stay loyal. To defend its integrity, the company recently made national headlines by announcing it would prosecute those involved with publishing fake reviews.
The decision to litigate gives teeth to the organization's long-held anti-manipulation policy. Amazon points out, "Customers trust that they can shop with confidence on Amazon. Reviews provide a forum for sharing authentic feedback about products and services -- positive or negative. Any attempt to manipulate reviews, including by directly or indirectly contributing false, misleading or inauthentic content, is strictly prohibited."
Merchants gain a useful partner by selling on Amazon. High-integrity sellers can rest easy knowing that the playing field is not easily manipulated.
Related: Amazon Sues Alleged Sellers of Bogus 5-Star Product Reviews
4. Reviews provide valuable market intelligence.
For entrepreneurs new to ecommerce, determining which products to sell can be overwhelming. This decision is even difficult for the most experienced sellers. To bring order to this process, many merchants turn to reviewing and tracking reviews.
Consider, for a moment, Amazon's full directory of product categories. Within a given category, there are typically several subcategories. At the product level, each item is given an "Amazon Best Sellers Rank" within the subcategory. By analyzing the reviews from products at the top, middle and bottom of these lists, sellers can gain invaluable insight into consumer preferences and concerns.
In short, reviews can serve as a digital focus group for any given product. This freely available information can then be used by the merchant to make inventory or strategic placement decisions and even to create entirely new products and brands to address limitations in current offerings.
5. Customers can vent about the product, not the merchant.
Although products can certainly be a representation of the merchant's brand, it is impossible for a seller to ensure satisfaction for each item sold. Personal tastes and preferences, incorrect sizing or unrealistic expectations can create dissonance.
Luckily, Amazon differentiates between customer reviews and seller feedback. A negative comment about the product in the form of a review is typically less impactful to the seller than a negative feedback. By offering two separate forums for people to share their opinions, merchants are able to protect their reputations.
6. Smart sellers monitor Amazon reviews.
As Amazon continues its path of ecommerce dominance, reviews will play an even more important role for third-party merchants. Understanding the psychology of customer reviews is important for making smart business decisions, winning the Buy Box and ultimately thriving online.
