The eWOM Impact on Sales Distributions in Markets with Different Product Evaluation Standards

This study investigates the impact of electronic Word-of-Mouth (eWOM) on sales distributions in various markets. The product information in eWOM helps customers to reveal their demands more clearly, thereby leading to the change of sales distributions in online markets. For the research, we categorize the markets based on the similarity level of product evaluation standards. If products in a market have similar evaluation standards, the product information given through eWOM will be applicable to most customers. If products in the market have different evaluation standards, then the information will not be applicable to other customers. Therefore, when product information is delivered through eWOM, in a market having similar product evaluation standards, it will enhance the sales concentration of high-ranking products by reinforcing the objective rankings among the products. In contrast, in a market with different evaluation standards, product information will loosen the sales concentration of the high-ranking products because it helps customers to purchase the product corresponding to their inherently different tastes for the products. These predictions are formulated into three hypotheses and validated with the data collected from Amazon.com. We plotted the cumulative distribution functions of eWOM, which represents the total popularity, and statistically compared them using the Wilcoxon Signed Rank test to show the different eWOM ratio possessed by the high-ranking products. All the test results showed the adequate level of significance; thus the three hypotheses are supported.