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      Electronics Online


  • Search-sites
       and ratings
       
       • A tale of two
           search-sites
       
       • An argument
          against balance
       
       • You can
           play, too

  • Some well-known
       dealers

  • Dealer strategies:
       a few examples

  • All those
       pretty logos

  • The fine print


  • Relevant reading

Merchant ratings are an important factor in a shopper's choice of dealer. On a previous page we discussed two shortcomings of many ratings systems -- the weight given to relatively unimportant factors, and the reliance on unverified (often clearly phony) customer reviews. On this page we suggest that two other factors serve to bias most ratings in favor of the less ethical dealers.

Does Bad Equal Good?

The arithmetic of ratings based on customer reviews bothers us. When bad reviews are given equal weight with good ones, the casual reader may be too willing to do business with a troublesome dealer.

We'll illustrate with a real example. On PriceGrabber, DealerX's "Scorecard" has these statistics:

           Total Reviews (all-time): 320
           Positive Reviews: 208
           Neutral Reviews: 23
           Negative Reviews: 89
           Average Rating: 3.48 (out of 5)

DealerX is awarded 3.5 stars. Seeing only that score (which is all that shows up on the price comparison page for any particular camera), a shopper might conclude that this dealer is a reasonably good one to do business with. An analysis shows otherwise.

In short, a good review should not balance out a bad one. Our radical suggestion would be to give moderately bad reviews and very bad reviews more weight by counting them as negative points. DealerX, under our system, would be scored like this:

           Total Reviews (all-time): 320
           Positive Reviews (5 stars): 126  [count as 4 points each]
           Positive Reviews (4 stars): 82  [count as 3 points each]
           Neutral Reviews (3 stars): 23  [count as 2 points each]
           Negative Reviews (2 stars): 10  [count as -2 points each]
           Negative Reviews (1 star): 79  [count as -4 points each]
           Calculated Rating: 1.44 (out of 4)

Should Price Count?

Price is the first thing most shoppers look at when searching for a dealer, and low prices are easy for ratings sites to reward with a star or a smiley-face. But some of the most notorious dealers publish low prices with no intention of actually honoring them. Their well-known strategies include requiring the purchase of overpriced or deceptively-labeled accessories, substituting refurbished or gray-market products for the advertised ones, and charging inflated shipping and mandatory insurance fees. Giving these particular dealers credit for low prices favors them unfairly over their more honest rivals.

On most shopping comparison sites, the first page the shopper goes to is a list of prices for the NEOD-2006 [Newest Electronic Object of my Dreams-2006]. Before he clicks on the link to a dealer's ratings, he already knows how that dealer's price compares with the others on the list. What the shopper needs is a rating that reflects a summary of the merchant's general policies and, most importantly, previous customers' experiences and satisfaction.

So we think advertised prices ought to be considered separately from the other aspects of the buying experience, not blended with them in a merchant's rating. (In the DealerX example above, price and overall service are correctly kept separate.) When low prices effectively "balance out" low marks on customer service in a ratings score, consumers get a misleading impression.

Should Buying be Gambling?

Everybody takes risks with purchases. You may buy a $2 lottery ticket knowing that the odds are high you will lose that money. You may spend $5 on a new item at the supermarket knowing that there's some chance you'll hate it. But the higher the price, and the less the potential payoff, the less we're willing to take the risk. The decision is based on knowing the odds, the cost, and the potential payoff.

We think the dealer ratings sites distort the risk by making both the odds and the cost less clear, and the consumer distorts it by not being mindful of the limited size of the payoff. In the example on this page, this is what a shopper should understand before making any purchase:

• There is a 25% chance that I will be very unhappy with this transaction.
• The potential cost is uncertain, but could amount to significant money and inconvenience.
• The potential payoff is the amount I stand to save by buying here instead of at a proven, reputable store or online dealer. On a $2000 camera, this may be only $200 or $300.

Answers to Our Questions