An empirical study on the impact of online word-of-mouth sources on retail sales
| DOI | https://doi.org/10.1108/IDD-11-2016-0039 |
| Published date | 20 February 2017 |
| Pages | 30-35 |
| Date | 20 February 2017 |
| Author | Hong Hong,Di Xu,Dapeng Xu,G. Alan Wang,Weiguo Fan |
| Subject Matter | Library & information science,Library & information services,Lending,Document delivery,Collection building & management,Stock revision,Consortia |
An empirical study on the impact of online
word-of-mouth sources on retail sales
Hong Hong, Di Xu and Dapeng Xu
School of Management, Xiamen University, Xiamen, China, and
G. Alan Wang and Weiguo Fan
Virginia Polytechnic Institute and State University, Blacksburg, Virginia, USA
Abstract
Purpose – This study aims to analyze the impact of the source of online word-of-mouth (WOM) on retail sales. Specifically, the authors focus on
the relative impact of external and internal WOMs on book sales.
Design/methodology/approach – An empirical analysis is conducted with a panel data of sales and WOM for 87 books from Dangdang and
Douban over a 14-day period based on two generalized least square regression models.
Findings – Results suggest that both internal WOM and external WOM have significant impact on product sales, and the impact of external WOM
is relatively more significant.
Social implications – WOM, especially the external WOM, plays an important role in consumers’ online purchase decisions.
Originality/value – This study is helpful for retailers to better understand the factors influencing the sales and thereby forecast the future sales
more precisely. Besides, the research conclusion could also enlighten related decision makers to constantly improve technical platforms.
Keywords User generated content, Panel data, Relative importance, Empirical analysis, External WOM, Internal WOM
Paper type Research paper
1. Introduction
Shopping online has become part of individuals’ life because
of its high efficiency and convenience. Up to December 2013,
the number of net citizens of China had reached 618 million,
and 302 million of them had the experience of shopping
online, indicating that usage rate of shopping online had
reached 48.9 per cent (China Internet Network Information
Center, 2014). Compared to traditional shopping, online
shopping is unique in its temporal and spatial separation of
buyers and sellers (Luo et al., 2012); hence, consumers have to
confront more uncertainty when shopping online. To make
more advisable decisions, increasingly, more consumers turn
to user-generated content (i.e. online reviews or
word-of-mouth [WOM]) for help, making user-generated
content to be one of the most popular information resource for
various kinds of online consumers for their purchase decisions
(Li et al., 2014). Consumers can obtain product information
from a variety of sources; user-generated content such as
online WOM is more trustworthy than seller-generated
content (Bickart and Schindler, 2001). Prior research has
confirmed the significant relationship between online WOM
and sales of multiple kinds of products (Dellarocas et al.,
2007;Duan et al., 2008;Liu, 2006), leading many businesses
to make use of online WOM as a new marketing strategy
(Chen and Xie, 2008). To better use user-generated content,
Wang et al. (2013) developed an effective knowledge
management system for facilitating information seeking and
sharing in online communities.
According to the platform where online WOM is produced,
online WOM can be divided into internal WOM (e.g.
Amazon, Dangdang) hosted by retails and external WOM
(e.g. CNET, Douban) hosted by the third-party. Existing
research indicates that about half of consumers would scan
online reviews in multiple platform while shopping online
(Park et al., 2012); so multiple sources of online WOM play a
role in consumers’ decision-making process (Gu et al., 2012;
Zhu and Zhang, 2010). However, extant studies mainly
focus on the influence of either external WOM or internal
WOM on product sales, ignoring the impact of WOM
sources on product sales. After estimating the relative
impact of different WOM sources on product sales, Gu
et al. (2012) found that consumers are less influenced by
internal WOM while purchasing high-involvement
products. However, the influence of WOM sources on
low-involvement products such as books sales is still
unknown. To fill this gap, this study takes both external
WOM and internal WOM into account to find out their
joint influence on low-involvement product sales. More
specifically, we collected book review data from
Dangdang.com and Douban.com to analyze the relative
impact of external and internal WOMs on retailer sales
using a panel data of sales and WOM for 87 books over a
14-day period.
The rest of this paper is organized as follows. We review
related literature and put forward our research hypotheses in
The current issue and full text archive of this journal is available on
Emerald Insight at: www.emeraldinsight.com/2398-6247.htm
Information Discovery and Delivery
45/1 (2017) 30–35
© Emerald Publishing Limited [ISSN 2398-6247]
[DOI 10.1108/IDD-11-2016-0039]
Received 5 November 2016
Revised 2 December 2016
Accepted 9 December 2016
30
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