Showering plaudits on the latest bit of electronics kit online can do wonders for the product’s sales figures. Here in the UAE the practice has been slow to catch on, yet in the US the numbers prove endorsements help to shift units.
Everyone’s been raving about it
But could this ultimately be a good thing?
Local sites such as Jumbo Electronics' Jumbocorp.com and Emiratesavenue.com, for example, host few if any digital reviews from customers on pages that tout their high-tech gadgets. While neither company responded to a request for comment, Jackys.com first considered including online reviews back in the early 2000s “with the iteration of the website we had then, but I don't think it is something we'd necessarily incorporate,” says Ashish Panjabi, the chief operating officer for Jacky's Group of Companies.
“You need to have critical mass when you start incorporating reviews and I think with the emergence of so many tech blogs or websites, you see so many comments on there from a much more diverse user base that I think adds more value to what a single website could offer,” adds Mr Panjabi.
But technology retailers may be missing out on a golden opportunity. That is, if the dynamics of online reviews in other sectors play out in the same way within the consumer electronics market.
In the hospitality industry, for instance, research has shown that a 1 per cent increase in a hotel's online reputation score can push its daily rate as much as 0.89 per cent higher than average. This same 1 per cent bump in reputational improvement may also contribute up to an additional 1.42 per cent in revenue for each room, according to a study conducted by Chris Anderson, an associate professor at Cornell University's School of Hotel Administration.
Sales data from the online travel site Travelocity has also shown that if a hotel boosts its rating by one full point – from three to four stars out of five, for example – then it can increase its price by more than 11 per cent and still maintain the same level of occupancy or market share, Mr Anderson's study found.
In what may be good news for the travel industry within the Arabian Gulf, web-based reviews are becoming a more important source for travellers in helping with making decisions. The primary sources for online information among affluent travellers in the UAE include digital videos in conjunction with maps, according to 21 per cent of respondents in a study released in May by Ipsos for Google. Airline sites follow, at 18 per cent, then travel review sites with 13 per cent.
Search engines fall to the back of the pack, with just 5 per cent of respondents noting that this is their primary source of research.
The increased reliance on online reviews has also meant a shift within the restaurant industry. One study conducted by a Harvard Business School professor found that a one-star increase on the restaurant review site Yelp led to a 5 to 9 per cent increase in revenue. The study was based on an analysis of Yelp reviews with revenues for every restaurant that operated in Seattle at any time between 2003 and 2009.
Clearly, then, there are tangible benefits for consumer electronics manufacturers and retailers if they are able to convince patrons to share a glowing review about a product or service. Yet this also acts a powerful incentive and, in some cases, companies have allegedly paid money for positive posts.
Others have taken to writing fake reviews.
Last month, it was reported that Edmunds.com, a car-buying site in the United States, agreed to settle a lawsuit after it sued a company for allegedly creating more than 2,000 accounts in an attempt to post fake reviews of car dealers.
Similar lawsuits have been filed between companies before, while some shoppers have become somewhat disenfranchised by e-reviews after popular sites such as Amazon.com have been accused of leaving up bogus product assessments.
“You hear stories of companies writing positive reviews, and negative reviews of their competition,” says Rich Tehrani, the group editorial director who covers technology at TMCnet.com, a marketing and media company.
“What I believe is we'll see more of this,” adds Mr Tehrani. “What we need is a system whereby we can more accurately vet the reviewer and to make these reviews more trusted. The less anonymous you are, the higher the quality-most likely-of what you're going to say or write.”
Within the consumer electronics market, gadget reviews are carefully considered before any purchase is made, even though they are typically supplemented with word-of-mouth recommendations from family or friends, tech analysts say. Nearly three quarters of Americans surveyed by the Consumer Electronics Association (CEA) say product reviews were important in their decision-making process of which new electronic to buy.
Even so, some industry proponents argue that consumers approach these e-reviews with a healthy dose of scepticism.
“To me, someone is sceptical if they're forced to rely on just that piece of information, but they're not just relying on those online reviews,” says Shawn DuBravac, the chief economist and senior director of research for the CEA. “They're using it in conjunction with a variety of things.”
One of those sources includes social media channels, such as public endorsements via Facebook or Twitter. But even these recommendations have come under scrutiny of late.
Earlier this year, the federal trade commission in the US issued a warning to marketing companies and celebrities that they must clearly disclose any product or service endorsements they make on social media sites where they have been paid.
It remains to be seen whether or not similar regulations in the US, or elsewhere such as the Gulf or wider Middle East, will help clear up sites with illegitimate online reviews. Yet this may not be an issue within the UAE if gadget reviews remain concentrated in areas untainted by manufacturers or retailers who are looking for a leg up on their competitors.
“The upside with review sites is that it surely helps give you insights that you would find otherwise difficult to obtain or to help reaffirm a choice you've made,” says Mr Panjabi. “The downside is that the internet is a democracy and you hear all sorts of opinions, whether people are in a position to give them or not.”