It's probably no great secret that third party sales on Amazon have skyrocketed to represent nearly 60 percent of their business. Similarly, it's probably no great secret that video conferencing has also skyrocketed, even prior to the pandemic.
From a logistics standpoint, it's understandable why. More businesses face the prospect of a remote workforce now more than ever, with global market expansion quickly becoming a key objective—even for historically small enterprise segments.
But third party online retail is an altogether different beast than other enterprise businesses. It requires viability. It requires trust. And above all, it requires verification.
Trust and eCommerce
Digital retail has always embraced remote workforce and fulfillment solutions. They're not just effective. They're positively necessary.
But the push towards virtualization brings its own set of unique challenges. And that includes an increasing amount of reports of fraud.
You can't always vet the legitimacy of a business on the strength of their online presence alone. And you can't always vet the legitimacy of a seller based on their Amazon presence, either. There's a certain level of trust customers have in Amazon, and they're not about to risk ruining their hard-won reputation by breaking it.
Sadly, that trust may not always be warranted.
Seller Fraud on Amazon
Seller fraud on Amazon isn't anything new. In 2016, reports indicated as many as 6,383 individual complaints per month were launched against third party sellers for a failure to deliver on promised orders.
These weren't merely counterfeit merchandisers; a practice Amazon has admitted liability for. These were outright scams designed by unscrupulous sellers who knew they could garner a quick profit by operating a fly-by-night storefront on Amazon,
Unfortunately that trend has persisted to this day, despite Amazon's concerted efforts to weed out fraudulent sellers in recent years.
Security, Amazon and Fraud Prevention
Amazon's no longer the only eCommerce game in town, even if they continue to be the most dominant player. But if fraud, scams and pirating remain rampant, why are there currently over six million third party sellers active on Amazon Marketplace?
Because they're not just the most well known. They're also one of the most secure. No digital storefront is immune from fraudulent sales practices. And in fact, some of the larger players have been known to turn a blind eye when addressing complaints of counterfeits and service infringements.
But Amazon's become more zealous in combating seller fraud. Over $500 million was spent by Amazon in 2019 to combat fraud and abuse, resulting in the removal of 2.5 million accounts and successfully blocking some 6 billion misleading listings.
It's not simply lip service. It's an active process of streamlining the entire customer experience. And though Amazon's policies can seem cumbersome to many new sellers, they're in place to protect their reputation just as much as they protect customers.
Seller Verification and Live Video Calls on Amazon
In 2020, Amazon announced they were piloting a test trial of enhanced video conferencing as part of their seller identity verification process. In the past, all that was necessary to register for a professional seller account was simply providing Amazon with an online application and to submit documents such as a business license, bank account statement or a business address.
Anyone who's been a victim of identity theft knows just how easy a stolen credit card statement, a bank statement or any other identity document can be used to ruin your life. But they can also be used for the purpose of setting up an online scam—using your name to perpetuate a cycle of fraud.
But as both companies and buyers noted, lax approval standards can open up a floodgate of counterfeit goods—particularly from sellers located in China. It's been enough to discourage major brands such as Nike, with some companies opting to leave Amazon altogether; most notably Birkenstock, who cited Amazon's “unacceptable business practices” as a reason for their 2016 departure.
Birkenstock might be able to afford to lose their presence on Amazon. But what does Amazon's new enhanced seller identity verification policy mean for smaller third party sellers?
What it means is that both current and prospective sellers will now have to confirm their identity in a live video call for further clarification, using Amazon's proprietary Chime platform.
It's a relatively simple verification process, requiring confirmation that sellers match their photo ID and submitted application identity documents. To date, over 1,000 video interviews have been conducted with sellers from the US, the EU, China and Japan.
“Amazon is always innovating to improve the seller experience so honest entrepreneurs can seamlessly open a selling account and start a business, while also proactively blocking bad actors,” an Amazon spokesperson confirmed in April. “As we practice social distancing, we are testing a process that allows us to validate prospective sellers' identification via video conferencing. This pilot allows us to connect one-on-one with prospective sellers while making it even more difficult for fraudsters to hide.”
But Amazon's move towards video call identification isn't without criticism.
Video Verification And Privacy
While video conferencing has long been leveraged by organizations as a cost effective solution for the interview process, an increasing number of businesses are using video calls as a fraud deterrent. While Amazon has always been proactive in ensuring account security measures, there are some critics who feel the introduction of video verification may be excessive.
According to a BuzzFeed article published in 2019, numerous users expressed concerns that Amazon would be using its heavily criticized facial recognition technology as part of the seller verification process, leading to questions about both privacy, data security and facial recognition's accuracy.
"Is Amazon using this data for purposes beyond seller verification?” asked Matt Cagle, a civil liberties attorney with the ACLU. “Amazon should make it crystal clear they are not exploiting this sensitive face data to, for example, enrich the face surveillance product that a coalition of 90 groups just demanded the company stop providing to governments,” he added, referencing the company's controversial Recognition service.
Amazon, however, has indicated they're not currently using facial recognition technology as part of the seller identity verification program. Instead, it's just one solution in an active counter fraud initiative that includes the recent introduction of intellectual property accelerators and the establishment of a Counterfeit Crimes Unit working in close partnership with federal law enforcement authorities.
Can Video Verification Help Third Party Sellers On Amazon?
Third party sales make up over half of Amazon's business—a number so significant that more and more sellers are exclusively turning to Amazon as their sole sales channel. But it's a far from seamless experience.
New sellers frequently chafe at the restrictions Amazon currently has in place and may have legitimate concerns about the necessity of video verification. What they fail to understand is that it's not an invasion or privacy. It's a reinforcement of their own security.
If Amazon wasn't proactive in prosecuting frauds and counterfeit sellers, third party sales wouldn't just decrease on Amazon. They'd decrease across every conceivable channel.
“Guilt by association” isn't just a generic cliche . In retail, it's an extremely tangible threat. Any measure designed to reduce illegitimate sellers isn't just a boon to Amazon's reputation. It's a boon to yours, as well.
And verified identities are a boon to your sales.