Research Note---The Impact of External Word-of-Mouth Sources on Retailer Sales of High-Involvement Products

TLDR: The results suggest that a retailer's internal WOM has a limited influence on its sales of high-involvement products, while external WOM sources have a significant impact on the retailer's sales, implying that external WOM Sources play an important role in the information search process.

Abstract: Online word-of-mouth (WOM) such as consumer opinions, user experiences, and product reviews has become a major information source in consumer purchase decisions. Prior research on online WOM effect has focused mostly on low-involvement products such as books or CDs. For these products, retailer-hosted (internal) WOM is shown to influence sales overwhelmingly. Numerous surveys, however, suggest consumers often conduct pre-purchase searches for high-involvement products (e.g., digital cameras) and visit external WOM websites during the search process. In this study, we analyze the relative impact of external and internal WOMs on retailer sales for high-involvement products using a panel of sales and WOM data for 148 digital cameras from Amazon.com and three external WOM websites (Cnet, DpReview, and Epinions) over a four-month period. The results suggest that a retailer's internal WOM has a limited influence on its sales of high-involvement products, while external WOM sources have a significant impact on the retailer's sales. The findings imply that external WOM sources play an important role in the information search process.