So a few weeks ago, Reddit user ReviewMeta made a post discussing Amazon’s review system. For those of you who don’t know, Amazon has historically disallowed users from being compensated for reviewing a product, but has allowed businesses to offer products to customers in exchange for what they called “honest reviews”. If you’ve ever read an Amazon review in the last few years, you’ve undoubtably seen some version of the following:
“Bleh is an amazing product. A total 5 out of 5. For full disclosure, the company did send me a free version of Bleh, but that in no way influenced my review.”
Now back to ReviewMeta. His post on Reddit was about the data driven conclusion that he made after analyzing 18 million Amazon reviews. You can find his Reddit post here and his video below, but a tl;dr of his post is as follows:
- “Incentivized” reviews are totally biased
- The company he works for can help users sift through all that biased data
Yea, so his post was basically an ad for his company, but it was an informative ad and I wish his company all the best. However, they may no longer have to help users sift through the biased data. This is because Amazon just made changes to its “Community Guidelines” – which now states that they will eliminate incentivized reviews going forward, with one notable exception. The only incentivised reviews that will be allowed to remain are those from Amazon vine.
You can read the Techcrunch article here that goes into more detail on the reasons for this new change and the data that supports it. However, what I want to discuss is 2 fold.
1: I have no idea how much influence ReviewMeta’s post on Reddit or his Youtube video had on Amazon’s decision, but just the fact that mere weeks separated his post from Amazon’s policy change shows the democratization and influence of the internet. It also shows that Amazon is a company that can move rapidly and can make quick changes to its structure if given the proper information. I would say that this sort of agility is rare for a company like Amazon, but there really doesn’t exist a company quite like Amazon to compare it with, at least anymore. We should look out for this type of agility from the company in the future, and we should expect it from others as well.
2: I believe this policy change will only help the company in the long term. There is a mountain of research on the economics of implicit incentives that shows just how influential incentives can be to the human subconscious (Avery and Meyer 2009). On top of that, there is literature that demonstrates just how important it is to signal quality in online marketplaces through 3rd party information (Waldfogel and Chen 2006). These two pieces of research, coupled with what we have seen from these incentivized reviews on Amazon, showcase a perfect storm of behavioral economics that negatively impacts consumers: Companies know full well that by sending freebies out to 3rd party reviewers, there will be some implicit bias in favor of their products and that will influence future customers. Indeed, some data suggests that customers are likely to spend up to 31% more on products with “excellent” reviews. That was a long winded way of me saying that Amazon’s old policy provided a terrible environment for normal buyers. Or as Reddit user “snsv” more concisely stated, it “jacked up the entire review system”.
With this new policy, I fully expect 2 things to occur. 1: People will start actually reading and trusting Amazon reviews again. For a while, there was no point in looking at the reviews for popular products because they were all either 4.5’s or 5’s. 2: Customers expectations before buying a product will more closely align with their satisfaction after buying that product. With these incentivized reviews out of the system, there should be less letdowns when a product finally arrives at your house.
Both of these futures lead to a better platform for Amazon and its customers.
Image credits & Video credits: ReviewMeta