Perhaps the most inevitable outcome of Amazon's continuing dominance in both eCommerce as well as brick and mortar retail has been the explosion of new brands designed specifically for an Amazon audience.
The explosion may have come as a surprise to analysts. But for smaller brands looking to launch new products, Amazon isn't just a logical first step. It's a vital necessity.
That's because Amazon Marketplace is effective. It's highly visible. Initial investment is minimal. And perhaps most importantly, it enables social proof—one of the more significant marketing tactics for any brand hoping to make headway in the digital retail jungle.
But you can't buy positive reviews. And you can't remove reviews on Amazon. Authentic feedback is the result of authentic standards, not incentivization. You simply can't rig Amazon's terms of service.
Even if you're a brand with $1 Billion in sales.
Amazon, Fraud and Bad Actors
According to Amazon's 2020 Brand Protection Report issued in May 2021, over 5 billion changes to product detail pages were scanned in an attempt to weed out suspected counterfeiters and unverified claims, resulting in the seizure of over 2 million pirated items.
While fraud and counterfeiting continue to be a pervasive concern throughout digital retail, Amazon is one of the few platforms addressing what is now estimated to be at least a $1.5 Billion threat in the US during 2020 alone.
While China, one of the more notorious hotbeds for counterfeiters, has recently attempted to curb the onslaught of fake goods by proposing stiffer penalties for vendors found engaging in intellectual property infringement, the problem of online fraud runs much deeper than just one country. And it runs deeper than pirated goods.
In fact, it may be embedded in one of the greatest strengths of eCommerce itself: social proof.
Online Reviews, Manipulation, and Social Proof
Counterfeits aren't the only threat to Amazon's reputation. They're simply one of the more pervasive ones.
With 95 percent of shoppers using online reviews as a chief guideline in their purchasing decisions, social proof can ultimately launch or destroy a brand overnight.
There's no exact formula for social proof. It's not a question of having enough sales to maintain visibility on Amazon. Nor having the right product type. It's a question of fulfilling a need that doesn't just meet customer expectations, but exceeds them.
It's been estimated that up to 42 percent of online reviews are fake reviews, according to an assessment of some 720 million listings on Amazon conducted in 2020. Review abuse is a factor that Amazon takes seriously, allocating a considerable amount of time to immediately suspend selling privileges for vendors found to manipulate reviews—and in many cases, taking direct legal action against for-profit review manipulation schemes.
But while Amazon has maintained long running and detailed policies against incentivized and fake reviews, resulting in thousands of highly public lawsuits over the past six years, it hasn't deterred some Amazon-exclusive brands from attempting to manipulate reviews.
Including brands collectively estimated at over $1 Billion in sales on the platform.
The Overseas Market and Review Manipulation on Amazon
In April 2021, Amazon suspended fourteen different brands originating in China for taking part in a review manipulation scheme aiming to reward users through financial incentives and free products in exchange for five star reviews.
While this scheme is hardly new, what makes Amazon's mass reinforcement of review guidelines noteworthy is the fact that these brands aren't necessarily low profile entities.
They were by and large well known to the Amazon community because they were designed and created to be sold specifically on Amazon itself, including Mpow, Aukey and Seneo—all hoping to emulate the success of Anker, an Amazon-native brand who began their start as a third-party seller on the platform in 2011 only to go public last year with an initial offering of $10.30 a share.
Included in the suspension were over a dozen additional third-party sellers also originating in China, a market now estimated to represent 75 percent of new sellers on Amazon in 2021.
While the Chinese eCommerce market is the largest global adopter of digital trade with a total retail share predicted to be over 50 percent in 2021, fierce competition has forced many sellers to adapt to internationally based platforms.
But the Chinese digital market has been notoriously lax in enforcing regulations against online fraud. Subsequently, many sellers have begun to utilize black hat tactics in order to survive regulatory enforcement in new markets.
Chief among these tactics are product review networks readily found on social media, where review writers can access IP proxies, overseas accounts and virtual payment processes for a nominal fee—an underground economy whose sole purpose is based on one principle: defeating Amazon's fraud detection algorithms.
Amazon's Fight Against Review Manipulation
A landmark 2020 case in Utah District Court ordered an Oregon-based dietary supplement manufacturer to pay some $9.5 million to a competitive reseller after it was found they committed deceptive advertising fraud by manipulating testimonials on Amazon to inflate the number of positive and unverified reviews.
Yet the Utah case isn't the first of its kind. As early as 2015, Amazon has filed lawsuits against alleged review manipulators, culminating in a historic Federal Trade Commission case in 2019 challenging a marketer's use of fraudulent paid reviews on Amazon—the first federal agency case to implicate fake reviews as a form of deceptive advertising.
Selling on Amazon and Their Terms of Service
New sellers may chafe at restrictions designed by Amazon to verify seller identity. But every day, those restrictions are becoming more of an outright necessity, not an exception.
Amazon has recently been found liable for defective products sold by third-party sellers; and there's little room for doubt that their recent development of a Counterfeit Crimes Unit was the result of increasing federal pressure on Amazon to combat the threat of fraud and piracy in Amazon's international marketplaces.
But there's a larger factor at stake with Amazon's terms of service than protecting themselves from litigation.
Amazon has built their reputation on being a customer centric company. And anything that diminishes the objectivity of consumer insights will impact that reputation.
With over half of US customers online beginning their product searches on Amazon, the need to maintain integrity and honesty in reviews is critical in 2021 and beyond. Misinformation runs rampant throughout digital media, and while it may seem like review manipulation is nothing more than a particularly desperate marketing ploy.
If Amazon can play even the smallest role in staunching outright review manipulation, they've taken one small step for consumers. But a giant step towards fairness and honesty in the digital world.
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