The Impact of Online Word-of-Mouse - Sales of New Products at Amazon.Com

Abstract

Online word-of-mouth (WOM) has become a major information source for consumers planning to purchase new products. This study examines the effect of online consumer reviews on the sales of new products. Using the data collected from Amazon.com over a period of nine months, we find that while the effect of valence of online reviews is greater than that of volume, negative consumer reviews affect new product sales more than positive reviews, but not in a negative way. Volume and valence of online reviews have greater impact on experience products than on search products. Moreover, the volume of consumer reviews has a greater effect on new product sales in the later stage of product life cycle (PLC). Thus, online WOM gains momentum over time and significantly affects the sales of new products beyond the initial period. Marketers need to pay greater attention to online WOM and promote consumer reviews when launching