Exploring the Impact of Incentivized Reviews on Product Sales and the Role of Review Inconsistency

Abstract

Incentives, like freebies and cash, are among popular approaches for sellers to obtain online reviews, especially for new products with little feedback that customers often use to make purchase decisions. While research has shown that incentives affect reviewing behavior, little do we know how these incentivized reviews impact product sales and how inconsistencies in these incentivized reviews influence consumer behavior. In this study, we collect sales data for numerous products that participated in the Amazon Vine Program to examine the impact of incentivized reviews on product sales using multiple econometric techniques. Although incentivized reviews could offer both benefits (e.g., delivering high-quality information) and drawbacks (e.g., creating a suspicion of advertising), we show that incentivized reviews positively influence sales, resulting in notably increased sales volume. However, this positive effect can be weakened by internal inconsistencies across incentivized reviews and be enhanced by external inconsistencies between incentivized reviews and organic (i.e., non-incentivized) reviews. Using a series of mechanism tests, we find that the impact of incentivized reviews on sales arises not only from the reviews but also from the information cues (e.g., review badges) and reviews’ spillover on organic reviews. We also conduct various specifications to demonstrate the robustness of our findings.

Keywords: incentivized reviews, product sales, review inconsistency, disclosure, spillover