On the Spillover Effects of Online Product Reviews on Purchases: Evidence from Clickstream Data

59 Pages Posted: 14 Sep 2016 Last revised: 3 Oct 2019

See all articles by Young Kwark

Young Kwark

Warrington College of Business, University of Florida

Gene Moo Lee

University of British Columbia (UBC) - Sauder School of Business

Paul A. Pavlou

University of Houston - C.T. Bauer College of Business

Liangfei Qiu

University of Florida - Warrington College of Business Administration

Date Written: October 2, 2019

Abstract

We analyze the spillover effects of the online reviews of other co-visited products on the purchases of a focal product using clickstream data from a large retailer. Drawing upon signaling theory, as online reviews serve as signals, the proposed spillover effects are moderated by: (a) whether the related (co-visited) products are complementary or substitutive, (b) the choice of media channel (mobile or PC) used, (c) whether the related products are from the same or a different brand, and (d) consumer experience and (e) the variance of the review ratings. To identify complementary and substitutive products, we develop supervised machine-learning models based on product characteristics, such as product category and brand, and novel text-based similarity measures; to train and validate the machine-learning models, we use product-pair labels from Amazon Mechanical Turk. Our results show that the mean rating of substitutive products has a negative effect on the purchasing of the focal product, while that of complementary products has a positive effect on the focal product purchases. Interestingly, the magnitude of the spillover effects of the mean ratings of co-visited (substitutive and complementary) products is larger than the effects on the focal product, especially for complementary products. The spillover effect of ratings is stronger for consumers who use mobile devices versus PCs. We find that the negative effect of the mean ratings of substitutive products across different brands in the purchasing of a focal product is significantly higher than those within the same brand. Lastly, we find that the effect of the mean ratings is stronger for less-experienced consumers and for ratings with lower variance. We conclude with theoretical, managerial, and design implications on leveraging the spillover effect of the online product reviews of related products to encourage online purchases.

Keywords: Online Product Reviews, Substitutive Products, Complementary Products, Brand Spillover, WOM Spillover, Topic Modeling, Machine Learning

Suggested Citation

Kwark, Young and Lee, Gene Moo and Pavlou, Paul A. and Qiu, Liangfei, On the Spillover Effects of Online Product Reviews on Purchases: Evidence from Clickstream Data (October 2, 2019). Available at SSRN: https://ssrn.com/abstract=2838410 or http://dx.doi.org/10.2139/ssrn.2838410

Young Kwark

Warrington College of Business, University of Florida ( email )

PO Box 117165, 201 Stuzin Hall
Gainesville, FL 32610-0496
United States

Gene Moo Lee (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Paul A. Pavlou

University of Houston - C.T. Bauer College of Business

Houston, TX 77204-6021
United States

Liangfei Qiu

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States

HOME PAGE: http://sites.google.com/site/qiuliangfei/

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