Author: Chinonso Etumnu, Ph.D. Candidate, Department of Agricultural Economics, Purdue University 

About Chinonso

Chinonso is a Ph.D. candidate in the Department of Agricultural Economics at Purdue University. Prior to coming to Purdue, he earned a master’s degree in agricultural development economics and international and development economics at the University of Reading and the University of San Francisco, respectively. Chinonso graduated from Imo State University with a bachelor’s degree in agricultural economics and extension. His research interests encompass agricultural economics, food and agricultural marketing, agribusiness management and international development. Chinonso can be reached via e-mail at cetumnu@purdue.edu or LinkedIn.

You are familiar with grocery shopping…

Before the internet era, grocery shopping was typically done at brick and mortar stores, but the introduction of the internet changed peoples’ way of life, including how they shop for groceries. It is now possible to order online and have your groceries delivered to your home, or pick up at the retailer’s store/curbside without exiting your vehicle. Online grocery markets were projected to be worth $100 billion in 2022 in the United States, and that estimate was published before the rapid acceleration over the past several months due to COVID-19.

Online Ratings/Reviews:

One commonly discussed feature that differentiates online grocery shopping from in-store shopping is the consumer ratings/reviews that are available. In many cases, consumers are allowed to provide ratings in the form of 1-5 stars, text evaluations and pictures to assess products they purchased online. The online retailer then typically aggregates this information for other shoppers to access.

What got me interested in online grocery shopping and consumer ratings in the first place? After spending two years in San Francisco and touring Silicon Valley during my master’s degree, I became fascinated with technology. Thus, I wanted my Ph.D. research to have some “techy” aspect. This coincided with the rise of Amazon and how the company revolutionized online shopping and now online grocery shopping. I later bought the book “The Everything Store: Jeff Bezos and the Age of Amazon” by Brad Stone to get a glimpse of how Bezos became so successful.

As much as my desire to study Amazon was driven by my entrepreneurial spirit, I am also a researcher who is eager to answer interesting economics-relevant research questions. The question I delved into was how the distribution of online ratings affect grocery sales using a case study of Amazon. The underlying question of whether online ratings affect online sales has been previously investigated, but given that Amazon and other retailers provide more information to consumers in the form of that all too familiar bar/star chart, I wanted to know if that information affected grocery sales on Amazon as well. I decided to deduce this information as moments of the rating distribution — that is, average, variance and skewness of ratings — as well as the individual 1-star, 2-star, 3-star, 4-star and 5-star ratings.

Then I ran into two problems. First, how do I get Amazon’s grocery sales data? Second, I needed to collect the data automatically to ease the research process. Luckily, Amazon provides a sales proxy, the Best Sellers Rank, and I came to discover Octoparse software for collecting the data. I then collected this information for ground coffee products on Amazon.

With the help of my advisors who are also my co-authors on the resulting paper (Drs. Kenneth Foster, Nicole Widmar and Jayson Lusk from the Department of Agricultural Economics at Purdue University, and Dr. David Ortega from the Department of Agricultural, Food and Resource Economics at Michigan State University), we recently published our findings in Agribusiness: An International Journal.

What did we learn?

We found that the distribution of online consumer ratings affects grocery sales on Amazon. Specifically, we found that the average rating and the variance of ratings increase grocery sales, while the skewness of ratings reduces grocery sales. We also found that the 5-star, 4-star and 3-star ratings increase sales while the 2-star and 1-star ratings reduce sales. Furthermore, we found that the effect of the distribution of ratings varies with the sales level of the products. That is, the effect of the distribution of ratings for a low sales product is much more than a high sales product.

The implications of these results may be important for retailers and producers who sell groceries online. We provide evidence that the distribution of online consumer ratings plays an important informational role. This could be another set of attributes for retailers to forecast the demand for groceries in a market that will soon be worth $100 billion and seems to be racing ahead with current lifestyle changes underway in the U.S. and around the globe.

Additional insights from Chinonso’s work on online grocery shopping can be found in a recent 2020 Choices article entitled “Grocery Shopping in the Digital Era” that details the demographics of online shoppers, types of products purchased and whether groceries were delivered or picked up curbside using a nationally representative sample of U.S. respondents.

ConsumerCorner.2020.Letter.15