Do they? It's not immediately clear that an Amazon where the average item has 4.7 stars would sell more stuff than an Amazon where the average is 4.2 stars. Consumers mostly compare items against others on the same site and it's possible that all grade inflation does is make the top performing items harder to separate out and makes buying harder.
As a counterpoint, Uber suffers from ridiculous grade inflation and it doesn't appear to have made riders love them any more. It's simply resulted in everyone adapting to 5 = slightly above average, 4.9 = average, 4.8 = run away screaming.