Friday, April 10, 2009

Amazon's Re-designed Review System Generates More Revenue But Has Plenty Of Untapped Potential

Amazon's design tweaks to its review system has resulted into $2.7 billion of new revenue argues Jared Spool. Other people have also picked up this story with their analysis. I am wary of absolute revenue numbers tied to a feature to derive lost opportunity cost since a variety of other things could have driven the sale. It is wrong to assume that people would not have bought the products had the feature not existed. However I do believe it is a great step in the direction of making the review system more useful and drive more clickthroughs and conversions. Simply the presence of the reviews, magic number 20 in this case, motivates consumers to drill down into the details of a product and its reviews.

Amazon has made significant progress in collaborative filtering through their review system and it is an exemplary of a long tail business model. It has helped consumers to gain transparency and has also helped expose issues with the products. This is not enough. As an e-commerce market leader I would want Amazon to continue innovating around their review system. This is what I specifically would like to see in Amazon's review system:

Mining social media channels: is not the only place where consumers talk about the products. Consumers discuss product features and frustrations on Facebook, Twitter, and other social media outlets. Amazon has an opportunity to provide unified product review experience, a tool similar to ConvoTrack, by tapping into these social media channels for all the product conversations.

Tag cloud as a visual filter: One of the ways to make sense out of large number of reviews is to generate a tag cloud from the raw text of the reviews. A tag cloud acts as a great visual filter to narrow down the reviews that the consumers are looking for e.g looking only at rebooting issues and not anything else while buying a router.

Provide diverse search options: I want to search for the routers that have 4 or 5 stars ratings in the last 6 months. I cannot do that today. This search criteria makes sense. Manufacturers fix defects via firmware updates and models tend to improve as they mature. If the item had many negative reviews early on there is no way to find out without reading the other positive reviews whether the issues have been fixed or not. Higher recent ratings tend to correlate with mature product and satisfied customers.

Re-think one-size-fits-all format: All the products sold on Amazon ranging from a book to a TV has the exact same review format. It does not have to be that way. The book reviews tend to be more subjective and philosophical where the gadget reviews are generally more fact-based e.g watch out this monitor does not come with a DVI cable. Re-thinking the format for the types of products being sold make sense e.g pros and cons section for the gadgets, similar books to the one that I am reviewing etc.

Incentivise people to write reviews: Few days after consumers receive a product ask them whether they are satisfied with their purchase or not. Incentivize them to write reviews on the product; not only this helps generating more reviews per product but it also brings people back to Amazon to make more purchases. Make promotional email personal and relevant e.g.

How are you liking the "Tipping Point"? Malcom Gladwell has authored his latest book called "Outliers" and we are positive you will enjoy that as well. Would you mind writing a brief review of "Tipping Point" and we will discount the Outliers for you by 5%.

Closed-loop feedback channel: The current comments structure does not allow the manufacturers, authors, and the publishers to identify themselves and clarify the features, issues, and respond to consumers' concerns. The reviews are a great platform and a closed-loop feedback channel for the vendors to converse with the consumers. Amazon could certainly extend the review system to help create a dialogue between the consumers and the manufacturers.

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