Certainly, the biggest thing to come out of the Internet of late, capturing media, analysts and users like is Web 2.0 or user generated content.

In fact, Business Week, in their article Retailers Take A Tip From MySpace, detailed how ecommerce sites are letting customers post comments, reviews and photos with regard to products, and the benefits it’s having on online commerce. And some of them are intriguing.

Referral selling is hardly a new concept thinking back to Tupperware and Avon but it appears now that we’re depending on the kindness of strangers more than ever to help us make our purchase decision. Customer feedback, according to Business Week, is changing the way companies market, manufacture and purchase their products. Morever, it’s simply helping them sell more, with a larger basket or average order size and decrease returns.

Good things all, to be sure. And in response to retailers biggest concern with regard to opening up their retail space to consumer opinion, that being negative feedback, retailers need not be aware, say Forrester Research, stating that 80% of all customer reviews on ecommerce site are positive.

And, if you’re Bass Pro Shops, even the negative is positive, negative reviews having flagged the company to a poorly made product that under normal circumstances was inexpensive enough that people wouldn’t complain about it. With user ratings and reviews, how poorly made became painfully obvious, and fast. The manufacturer is now in the process of fixing its faulty product.

But is this a case of too much of a good thing?

In his paper, Analyzing the economic efficiency of eBay-like online reputation reporting mechanisms University of Maryland researcher Chrysanthos Dellarocas suggests

a strong reporting bias in reputations on eBay and speculates that people who leave feedback are statistically more likely to be positive in their comments. Those who remain silent are likely to have squelched an urge to make a negative comment — either because they fear retribution in the form of negative scores added to their own reputation rating or because it’s simply less socially acceptable to make negative comments.

This suggests the difference between registered reviews and unregistered reviews being substantially different, with anonymous reviewers more likely to be less concerned about retribution. The difference between ebay users and consumers in general is ebay buyers also tend to be ebay sellers so there is a certain amount of risk attached.

User generated content also tends to be search friendly. This is apparent for a couple of reasons. First and foremost, user generated content tends to be text based, always a winning proposition when it comes to search, spiders and indexing. Secondly, user generated content is topical and tends to be refreshed frequently. Topical, fresh, text content. A win, win, win situation for retailers, consumers and the search engines.

What’s not to like?

And on the subject of user generated content, The (SEP) Guy, it doesn’t get much more user generated than building your own teddy bear.

~ The (SEP) Guy

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