The road to online retail dominance, as Wal-Mart is finally figuring out, is paved with customer content.
The company's announcement that it's allowing consumers to review and rate products on its website is a big, if belated, push by the stodgy giant into the social web, following scores of other retailers who have realized the power of crowdsourcing and co-creation. But all Web 2.0 good vibes aside, the real benefit may turn out to be how it affects the performance of the Wal-Mart online store and the goods its sells in search-engine rankings, a crucial factor in the performance of online retailers.
The reviews give Wal-Mart thousands of additional pages of content to be indexed by major search engines, which look favorably on unique content, such as reviews, compared with pages with basic product details that any retailer could have.
"Searches related to product reviews typically get a high volume of queries, so Wal-Mart could see a material increase in organic search traffic to its site," said Peter Hershberg, managing partner at the search-marketing firm Reprise Media.
Better search performance on sites such as Google and Yahoo brought on by all that additional content created by consumers could help bridge the gap with some of its competitors. Wal-Mart is the largest bricks-and-mortar retailer by some stretch, but it has lagged a bit in the e-commerce race. In June it was the fifth-largest retail site based on unique visitors, trailing eBay, Amazon, Apple and its smaller, hipper bricks-and-mortar rival Target, according to ComScore. While Target's online lead is narrow, its site traffic is growing faster.
Wal-Mart's previous forays into social media have been disastrous. A shot at creating a MySpace-like offering for teens missed the mark, causing the company to pull it just months after launch. Later, in an effort to soften its image, Wal-Mart hatched a travelogue blog scheme that blew up when it was revealed the blog was created and paid for by its PR firm. It would seem a little interaction with the masses would help, right?
"It gives an aura of objectivity," said Nielsen Buzzmetrics Chief Marketing Officer Pete Blackshaw. "It enhances the consumer experience, and it elevates the trust level as well. Plus, consumer-generated media is sticky content."
Wal-Mart executives said reviews and ratings were the feature most requested by customers, bearing out other indications of the importance of peer-to-peer approval. A study by Bazaarvoice, the Austin, Texas, company hired to power Wal-Mart's reviews, and the market-research company Vizu, found that 80% of shoppers have more trust in brands that feature reviews and that 75% of shoppers say it's extremely or very important to read customer reviews before making a purchase. Peer reviews, the study found, are preferred over expert reviews by a margin of 6-to-1.
The boon to both retailers and manufacturers is that positive reviews outnumber negative ones by a factor of eight, according to a separate study by Bazaarvoice late last year. "We are seeing a 'rating J-curve' across many clients in diverse industries," said Sam Decker, VP-marketing and products, in a release from last October. "The distribution looks like a J on a graph, where you see a low volume of one-star reviews, fewer two- and three-star reviews, and a huge jump in four- and five-star ratings."
That seems to be the case early on at Wal-Mart.com, which kicked off a test phase in June. As of Friday, of the 23 products reviewed, 22 had average scores of four or five, the highest ranking. The lowest score was for an inflatable swimming pool that had three-and-a-half stars out of five. But even that product had sold out of stock.