The Impact of Third-Party Information on the Dynamics of Online Word-of-Mouth and Retail Sales

摘要

Consumers have been widely searching information on third-party and retail websites before making product choices, yet receiving limited systematic investigation of how consumers process third-party information and retailer-hosted (internal) word-of-mouth (WOM) and its consequences on retail sales. In this research, we examine the impact of third party information on the dynamics of internal WOM and retail sales by analyzing a simultaneous equation system in a Bayesian hierarchical framework in online software market. We find that third-party information moderates the positive feedback mechanism between internal WOM and retail sales. Receiving third-party reviews positively interact with retail sales to increase volume of internal WOM, thus leading to more sales; whereas consumer adoption of free-trial services negatively moderates the impact of retail sales on internal WOM, which may potentially have a negative impact on future sales indirectly. The findings imply that third-party information interact with retail website information in influencing consumers' product choices.