Our third and final post about ratings and reviews highlights an interesting way to use them to estimate demand.
In his article, The Magic Behind Amazon's 2.7 Billion Dollar Question, Jared M. Spool suggests that the ratio of unit sales to reviews on Amazon.com is 1,300:1. If accurate, one could deduce how well a product is selling simply by counting the number of reviews it has received (e.g., two reviews = 2,600 unit sales).
It’s an interesting idea, though of course the ratio will vary (perhaps tremendously) by retailer and by product. Even so, it seems logical that the number of reviews correlates to sales volume. As such, the number of reviews might be a directionally useful indicator for estimating demand by looking at the number of reviews on competitors’ sites.
Improving business performance means helping retailers understand and deliver the products that customers want most. To that end, in addition to the number of reviews, we research the ratings and reviews of brands, categories of products, and specific products that our clients do not carry. Products with favorable reviews tend to sell better, so we frequently recommend products for our clients to consider adding to their inventory. Merging ratings and reviews with paid search performance data is a great way to uncover new opportunities and find right product mix.