In what will be good news to many beleaguered US and UK sellers, Amazon has cracked down on hundreds of major Chinese sellers for apparently faking or manipulating product reviews. According to Marketplace Pulse, well-known consumer electronics brands including Mpow and Aukey were among the accounts suspended.
The suspensions affected almost 300 sellers based in China and dozens of top-selling products – representing $1 billion-plus in annual sales. Online review practices are a hot topic. Just last week, the UK’s Competition and Markets Authority began investigating Amazon and Google for not doing enough to combat fake or manipulated product reviews.
Review integrity is essential to how the Amazon marketplace operates. For sellers, they affect search ranking and conversion rates. For shoppers, genuine reviews allow them to have trust in Amazon, so they know that what they are purchasing is a good quality product that matches their needs. A broken review system undermines trust and favors sellers who are willing to use black-hat tactics.
Amazon’s aggressive recruitment of Chinese manufacturers came to light in January, and dubious review practices have been an open secret among sellers for years. The question is: how did it get this far before something was done?
Amazon finally takes decisive action
To get some perspective on what it took for Amazon to finally bring the hammer down, let’s roll back the clock a few years.
A 2015 email from a former Amazon executive (unearthed as part of a US government investigation) bragged about the marketplace being the best place for Chinese manufacturers to sell globally, and that Amazon had over 100 staff members dedicated to this growth venture. And indeed, Chinese sellers flooded the marketplace. By January 2021, the number of new Amazon sellers nearly doubled from 2020 to 2021, rising from 47% to 75% of all new sellers.
This wasn’t coincidence or pandemic-induced – it was by Amazon’s own design. While it wasn’t illegal or unscrupulous for Amazon to be recruiting more international sellers, it did acknowledge the effect on the marketplace in the aforementioned email: “the risky downside to this is that US and EU based sellers do not find this avalanche of China-based sellers very amusing”.
At the same time, Chinese manufacturers are notorious among the Amazon seller community for gaming the marketplace system in various ways, including fake reviews. This became exposed dramatically in May 2021, when a data leak from a server in China exposed over 13 million messages involving Amazon sellers offering to pay customers for favorable reviews.
This revelation implicated over 200,000 individuals, and – it seems – led to the beginning of Amazon suspending a number of large Chinese sellers. While the reasons for these suspensions weren’t publicly disclosed, it’s not a large leap to understand what is happening and why. Now, with the UK’s CMA putting further pressure on Amazon to prevent sellers from manipulating product reviews, we are seeing public evidence of long-overdue enforcement.
But why wait until now? With Amazon both simultaneously courting and shutting down large China-based manufacturers on the marketplace, the old adage of “you can’t have your cake and eat it too” comes to mind. While bringing bad actors to justice is the right thing to do, and helps level the playing field for many domestic sellers, it certainly seems that Amazon could have handled the situation better.
Amazon likes to brag about its powerful automation that in 2020, “stopped more than 200 million suspected fake reviews before they were ever seen by a customer.” One would think that between its vast resources, powerful bots, and informed seller community (who have no doubt red-flagged many review manipulators in the past) that Amazon should have done a much better job catching and dealing with this behavior a long time ago.
Read more at Marketplace Pulse.
Sourcing products from India – new website
With everything going on between Amazon and Chinese manufacturers, perhaps you’re looking for a new sourcing option. Have you considered India?
Many ecommerce sellers are increasingly turning to India for sourcing high-quality, premium products made with natural materials. A newly launched platform, the India Sourcing Network, aims to help global sellers and brands build profitable private label businesses with products sourced from India.
Founded by sourcing experts and ecommerce sellers who understand the struggles faced by entrepreneurs as they import products from Asia, the platform offers an end-to-end solution for sourcing private label products from India.
Key resources for sellers include workshops, live webinars, in-person events, sourcing guides, access to vetted manufacturers and service providers, and a supportive community of sellers.
Find out more at India Sourcing Network.
Amazon news
PSP program pares down “collection account” providers
For international sellers with products sold across multiple Amazon marketplaces, one big question has always been: how do I get foreign currency proceeds back home with the least amount lost to exchange fees? Amazon’s own currency converter does not offer the most competitive rates, and it earns Amazon even more money from its usage.
Over the years, international sellers have often turned to any one of many collection account services, which offer significantly better exchange rates. Following a number of scams targeting Amazon sellers, these third-party providers are now regulated under Amazon’s approved Payment Service Provider (PSP) program. Now a major deadline is drawing near, as from July 15, 2021, Amazon will stop disbursements to sellers using service providers who are not banks and not part of the official PSP scheme.
For sellers, the time is now to make sure that any PSP you are using to potentially save 2-3% per currency transfer is on the updated, approved PSP list – or you’re not going to get paid.
It’s interesting to note how pared down this list is compared to the many service providers who used to be in this space. As of writing, there are only thirteen approved PSP providers. Of these, the majority are Chinese-owned companies and primarily target China-based sellers.
