Krzysztof is a lifelong future tech junkie investigating the latest stories from companies like Apple, Samsung, Google, and Amazon.
How Amazon Reviews Make Money
We have grown accustomed to buying the most popular product on the market because everyone around us buys it.
In a sense the things we buy whether in stores or online is influenced by peer pressure from our family, friends, and other consumers.
The idea of a product review is nothing new because ever since consumerism emerged we opted to go along with the consensus on what we buy.
This goes beyond your favorite store and extends to the movies we watch, the music venues we see, and the places we visit. It may be hard to gauge, but every consumer product we choose is influenced by someone else.
So what makes an online review so different?
The answer is that it doesn't make any difference conceptually because the idea is the same. However this time instead of asking whether we should buy something or not in person, the focus shifts to the highest online product ranking.
Again this extends beyond a piece of furniture or an article of clothing you're looking to buy and into products such as vacation packages. Travel review sites and hotel review sites like Expedia or Travelocity offer a nice look at what we, the consumer, might be interested in.
The beauty of the internet is that we don't have to subscribe to a bunch of magazines or check the hotel out ourselves to know what they're like. Instead these online review sites give us an amazing perspective of how a room may look like from different angles or how the view from outdoors is like.
For location review sites we are able to see photos and videos of all the attractions, family entertainment, the dining, or the nightlife these places have to offer.
The online review is no different than a more tangible review, but the possibilities are so much greater and part of that extends to the sites and company brands that are a part of it.
The Importance of Customer Reviews
We know that an online review explores different venues that we're interested in, but sometimes we overlook what they can do for the brand itself. When I refer to the brand, I'm talking about the product brands an e-commerce site offers and the online shopping sites themselves.
Amazon has become a major online conglomerate beating out all other e-commerce sites like Ebay and Craigslist. I'm not going to list why they've become so successful compared to other sites, but a simple visit to a few of those sites should give you an answer.
The question here is how can my review of a simple product like a lamp on Amazon generate revenue for both the online selling site and an affiliate/third party that represents said lamp?
Let's hypothesize that a lamp I purchased from Amazon was brilliant and one of the best lamps I've ever purchased. I decide to write a review of my purchase on the site and rate it five stars. Let's also pretend that I am the first person to ever rate this product.
My outstanding review of it could influence someone else whose looking to buy a lamp and perhaps they decide to buy the lamp I did. If they're also satisfied and write a praising review then the process continues. Eventually over a hundred people might buy that same lamp with an average rating of about four and half stars out of five.
With my high review of the product I've managed to influence others to purchase the same item and it creates a constant cycle that generates significant income for the selling brand and Amazon as well.
I try to write a few reviews on the products I buy online because I hope to influence another confused person's decision. I never used to think about how my review could generate money for the seller and the online site. After all how can one person's review out of the millions who visit the site have any influence, right? Well it can.
I always like to compare things I do with other real world events. For this example the process of voting is kind of like writing a review. When you vote you are one person out of millions who vote, and given that logic how would your one vote influence a result?
Well this is why I said voting is kind of like writing a review because on one hand you are casting a decision that plays a tiny part in the selection, but it's anonymous and people can't piggyback off of it like they can when they see your review.
Do Reviews Help or Hurt You?
It's a rhetorical question in a way because it would be difficult to believe that someone was never influenced by what another person has said regarding a product.
The person doesn't have to fully convince you to buy a product but perhaps one thing they've said caught your attention and you decide to try the item out.
Personally, the reviews of others have grown on me over time. In the past I never used to look so deeply into product reviews or movie reviews as closely as I do now. When it came to things like booking a hotel or choosing a vacation spot then yes I had to look at the reviews more carefully.
It's almost human nature to look at something more carefully if the price tag is higher. If you don't believe me then just think about when people are looking to buy a car, a home, or even a pool. The higher the price, the more you're going to look into it.
For me however, the changes I've made regarding reading reviews occurred within the smaller items. Even the tiniest purchase like a computer mouse or a USB from Ebay or Amazon took me some time to research before I clicked add to cart and buy now.
Those were the reviews I used to overlook because to me they didn't matter. If an item cost 10 dollars and it turned out to be a bad product, then I've only wasted 10 dollars and chances are I'd get my money back through the sites' return policies.
So what brought about the change?
I realized as I got older that I shouldn't have to waste 10 to 20 dollars on a bad product or wait a few days if not longer to get my money back (if possible).
It may not have seemed like a big deal to ignore the negative reviews of some of these products at the time, but I don't have anymore time to deal with the hassle of emailing the seller, complaining about the product, mailing back the product, and hoping I get my money back.
There are so many online reviews about a product that there's no excuse to ignore them. It is not worth the time to go through the trouble of returning a bad product or losing out on your hard earned cash. If you purchase a lot of goods online, then those 10 to 20 dollar buys add up and you could lose hundreds of dollars or more over the years.
The reviews will never be perfect and a highly rated product could turn out to be a clunker, but I'll take my chances because that's fairly rare. The reviews have and will continue to influence me, and they shouldn't be ignored by everyone else.
The Power of Digital Influence
The growth of e-commerce sites is only going to increase ten-fold in the coming years. There will likely be new online shopping sites popping up that will start to compete with Amazon, Ebay, and Craigslist for number one.
Our influence on the products we buy from these sites will only continue to grow as well and through our influence we'll continue to partially fund e-commerce revenue.
On a secondary note, it'll be interesting to see how the physical stores begin to fight back against the continuous rise of e-commerce sites.
When you have online shopping sites offering free shipping, great sales, and similar, cheaper products than a physical store, then it's no wonder why they are growing so popular. If you include the influence of our peers, then you have an excellent idea on what to buy rather than figuring it out yourself.
How do you feel about helping generate e-commerce revenue despite hurting physical store sales?
I'm sure there are some people who despise the fact that they are helping major corporate heads generate even more money for themselves because they destroy mom-and-pop stores and other smaller businesses.
I will say that's one of the unfortunate consequences of the growth of these massive online corporations, but that's also been the case since big chain warehouse stores like Walmart have come into existence.
In these constantly changing times we will have to accept that our influence will be both positive and negative though it should skew more positive. After all, we offer our advice on items as a means of expression and to help others either consider or avoid the products we've purchased.
The people, not the corporations, still have the power whether one believes it or not because we are the influence, we are the consumer, and we represent their and our future.