Exploring the WOW in online-auction feedback Bruce D. Weinberg a, * , Lenita Davis b,1 a McCallum Graduate School of Business, Bentley College, 175 Forest Street, Morison Hall 212, Waltham, MA 02452, United States b Culverhouse College of Commerce & Business Administration, The University of Alabama, 132 Alston Hall, Tuscaloosa, AL 35487, United States Received 1 October 2003; received in revised form 1 March 2004; accepted 1 June 2004 Abstract The reputation system, or Feedback Forum as it is called on eBay, is considered the most critical element for success in online auctions. Previous studies have examined only baggregateQ reputation measures. This research extends the investigation into bdetailed Q reputation- system information elements by classifying online-auction reputation information as a rating-and-review (RR) type of bword-of-webQ (WOW). We discovered, via a study of rating-and-review WOW from 86 websites, a characteristic that is unique to online auctions– bbidirectionality Q–and, in a study of online-auction utilization, found that indeed several bdetailedQ reputation-system elements, such as feedback reviews, are processed during consumer/bidder decision making. D 2004 Elsevier Inc. All rights reserved. Keywords: Feedback Forum; Online auctions; Word-of-web 1. Introduction eBay, the leading online retailer, has captured the fascination of both American consumers and corporations (Adler, 2002). With 104.8 million members, it has garnered approximately 52% of all gross online retail sales, US$8.0 billion out of US$15.5 billion, during the first quarter of 2004 (eBay, 2004; US Census Bureau, 2004). And the future of Internet auctions looks bright as eBay financial results for Q1 2004 compared to Q1 2003 reported increases in net revenues and GAAP net income of 59% and 92%, respectively; in addition, sales and marketing expenses as a percentage of net revenues decreased to 25% from 26% during that same time period (eBay, 2004). Prominent marketers have proclaimed the importance of studying online auctions; and practitioners have pointed to eBay in particular as the torch bearer for success in e- commerce. For example, Chakravarti et al. (2002) strongly recommend that marketers take a stronger interest in online auctions by emphasizing bdespite the growing interest in traditional and Internet auctions, the marketing literature is sparse;Q and, George Day has described eBay bas perhaps the most successful of all the breakthrough applications on the InternetQ (CNET, 2002). While there are many reasons cited for the success of online auctions, the reputation system, or Feedback Forum as it is called on eBay, has been considered the most critical element (Grant, 2002; Hof, 2001). eBay’s Feedback Forum is where buyers and sellers can rate and read about each others’ past transaction experiences. Each eBay member has a Feedback Profile which tracks and maintains several pieces of reputation-related information about the member, including individual-auction feedback reviews, which con- sist of a satisfaction/dissatisfaction rating and comments by others who have participated in an online-auction exchange with this member. It also has an overall feedback rating which is, in essence, an aggregate reputation score (for an example, see Fig. 1). Most online-auction studies have focused on eBay or used eBay-generated data; and, those that have investigated the impact of seller-reputation on consumer/bidder behavior and auction results have considered only aggregate or 0148-2963/$ - see front matter D 2004 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2004.06.004 * Corresponding author. Tel.: +1 781 891 2276. E-mail addresses: celtics@bentley.edu (B.D. Weinberg)8 ldavis@cba.ua.edu (L. Davis). 1 Tel.: +1 205 2597, +1 348 2597. Journal of Business Research 58 (2005) 1609 – 1621