Dynamic Approach to Online Reviews & Sales Relationship

The aim of this research is to examine the effects of the volume and the valence of online reviews on product sales. In order to do that, panel data has been collected from Amazon.com with the help of a specifically developed software. The sample consists of brands including furniture, laptop, dental care, and TV categories. Generalized Method of Moments (GMM) models are utilized as analytical tools. The first model reveals that volume has a significant negative effect referring an inverse relationship between sales and volume. The effect of valence is found to be mixed. In terms of valence, whereas negativity of reviews effects sales, however, the average rating does not have any influence. The second model, consisting the moderating effects of product categories, reveals that the influences of both volume and valence variables vary for each product category.