aprilhenry (aprilhenry) wrote,

Search no more! I've got the answer!

Okay. Say you have a book on Amazon. And you want to know why it's ranking is under 1,000 (great) or over 500,000 (not so great).

Well, I have the answer, as reported in a Yale study:

"The book’s sales rank on a site is a function of a book fixed effect (νi), a book-site fixed effect (μiA), and other factors. The book fixed effect is related to factors such as the offline promotion, the quality of the book, and the popularity of the author. The book-site fixed effect is related to the fit between the book and the preferences of the customers of the site. That is,
(1) ln(ranki A ) = μiA + νi + αAln(Pi A ) + γ Aln(PiB) + XΓA + SΠA + εi A , and
(2) ln(ranki B) = μi B + νi + αBln(Pi B) + γBln(Pi A ) + XΓB + SΠB + εi B,
where rank denotes the sales rank; the superscripts A and B refer to Amazon.com and bn.com, respectively; P denotes price;10 X denotes the vector of review variables from both sites (we allow Amazon.com reviews to affect bn.com’s customers and bn.com reviews to affect Amazon’s customers); and S is a vector of dummy variables summarizing the shipping times promised by each Web site for each book.

Okaaaay. I'm sure you followed that as well as I did. The study also says, "The authors find that (1) reviews are overwhelmingly positive at both sites, but there are more reviews and longer reviews at Amazon.com; (2) an improvement in a book’s reviews leads to an increase in relative sales at that site; (3) for most samples in the study, the impact of one-star reviews is greater than the impact of five-star reviews; and (4) evidence from review-length data suggests that customers read review text rather than relying only on summary statistics.

Read more here.

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