Earlier this week, a post touched on the murky world of fake reviews. A pivotal 2021 study in SIGecom Exchanges by He et al. delved into this labyrinth on the behemoth platform, Amazon. The dance between third-party sellers, consumers, and the platform itself is somewhat like a strategic ballet, with each trying to outmaneuver the other for a sliver of extra margin. It’s an intricate competitive ecosystem where strategy meets survival.
In the shadows of Amazon’s marketplace, a clandestine trend thrives: sellers acquiring fake reviews through Facebook private chat groups. The allure persists despite Amazon’s prohibition of this practice. After all, Amazon’s algorithm favors products with higher sales and stellar reviews, catapulting them into the limelight, which in turn boosts sales. Therefore, buying fake reviews is like unilaterally deviating from the honest strategy and it seems to be beneficial, at least in the short term.
He’s study in 2021 took a deep dive into this underworld. The researchers played 007, in a stroke of investigative genius, infiltrated Facebook groups dedicated to fake reviews. They meticulously tracked brands engaging in this deceit, monitoring their sales performance, keyword rankings, and other tangible metrics. Their statistical analysis focused on the performance of these sellers around the time they purchased fake reviews. Coinciding with this, Amazon’s 2020 ‘purge’ of reviews - a heightened effort to delete dubious feedback - provided a unique backdrop. This allowed the researchers to employ a ‘difference-in-difference’ approach, isolating the impact of fake reviews from other promotional tactics.
The findings were stark: in the short term, fake reviews significantly boosted ratings, keyword positioning, and sales. However, the long-term story painted a different picture. For most sellers, the artificially inflated ratings eventually plummeted, often accompanied by a surge in scathing one-star reviews from genuinely disgruntled customers who had been misled. The repercussions of these manipulated ratings are far-reaching, eroding consumer trust and introducing a toxic competitive environment.
And it’s not a static competition either. Consumers are adapting, increasingly valuing genuine negative reviews over suspiciously perfect ratings. Platforms, too, are evolving, refining algorithms to spotlight sellers of genuine merit. (There has been papers in both aspects.) But perhaps the real solution lies beyond mere system tweaks. Imagine a reimagined rating mechanism that fosters transparent, honest interactions between consumers and sellers, showcasing authentic, valuable information. A utopian idea? Perhaps. But the one who cracks this code might just be a contender for a Nobel Prize in Economics. I’m not kidding.