These past few years have been a big change for the economy. The economic crisis of 2008 has paved the way for the sharing economy, which it is expected to grow over $355 billion by 2025. In fact, it is reshaping the way we are doing business, disrupting traditional services and leading to the uberization of society.
What does the disruption in consumers’ habits mean for peer-to-peer platforms?
Consumers’ habits have shifted to be more and more focused on peer-to-peer platforms. Therefore, reviews and ratings have become the new standards for successful exchanges of services and goods among users. Besides, sharing economy users attach importance to reviews.
In fact, an FTC report shows that “according to one study, 75% of people trust peer reviews and have become the foundation for how individuals evaluate ‘holiday destinations, restaurants, consumer goods, even people.'” Thus, it means that people expect platforms to integrate reviews and ratings so they can have an overview of their peer’s reputation and their trustworthiness.
Nowadays, sharing economy platforms cannot survive without rating systems and must provide users with as much transparency as possible. The asymmetry of information is an issue that should be avoided by platforms as it gives more power to one of the parties. Likewise, users should have the opportunity to reply to their reviews in order to clarify misunderstandings.
How can review and rating systems help peer-to-peer platforms increase their reputation?
Having an integrated system of ratings and reviews definitively helps to build trust among users. Whereas a rating is a ranking system that can be made of stars or points, reviews allow users to describe their experience in details, stating good and bad sides.
In one of his articles, Srinivasan R, Professor of Corporate Strategy at the Indian Institute of Management Bangalore stated an important advantage of reviews, saying that “Reviews add value by highlighting specific peculiarities in the product/service offerings that could not be captured by the ratings.”
An example is ridesharing, where people will usually look for their potential driver’s reviews before booking a drive. Therefore, good and bad reviews will strongly influence the chance to book for the passenger.
“Reviews add value by highlighting specific peculiarities in the product/service offerings that could not be captured by the ratings” Srinivasan R
- “Aggregating a user’s reputation across several platforms could generate strong benefits”
- “Users will pay a premium for goods or services if the individual provider has a higher rating and the provider is more likely to conduct a sale”
- “Ratings and reviews can screen bad actors and deter the worst type of fraudulent behavior”
- “There is a strong correlation between leveraging a reputation rating system and the growth in activity for a platform”
Ratings and reviews are a big potential for platforms as it can leverage their reputation, build trust among users and increase their activity. On another hand, it represents a challenge. According to the European Commission’s study of consumer issues in peer-to-peer platform markets, peer-to-peer users and providers were only 40% likely to use reviews regularly. Consequently, platforms need to find ways to increase this proportion. In fact, the way ratings and reviews should be implemented need to satisfy all the parties involved.
Deemly is a verification tool that integrates reviews and ratings from different sharing platforms to build a trusted community of users. Our products include trust widget profiles and ratings and reviews plugins. Learn more about our solutions.