With an estimated 75 percent of new sellers in the top four Amazon markets in 2021 being based in China, it’s fair to say that the country has a relatively disproportionate representation. While the Chinese marketplace has historically been dominated by the likes of Alibaba and JD.com, Amazon has historically made little headway in the nation. In fact, they announced the closure of its presence in 2019 to focus on cross-border sales support to Chinese consumers.
But the demand for cheap manufacturing and exports has become even more critical to the global eCommerce boom over the last 18 months. Over 50 percent of China’s retail sales business is now digital in 2021, with projections of 55.6 percent by the end of 2022. The only number more impressive is China’s manufacturing strength, which now sits at a staggering $4.84 Trillion in sales.
So why did it take a Federal Trade Commission inquiry in May for Amazon to remove Chinese sellers found indulging in fake review schemes some two years after the FTC brought its first case against paid reviews?
Fake Reviews, Amazon and the FTC
The 2019 complaint filed by the FTC was the result of a two year investigation into the practices of one seller: Cure Encapsulations, Inc. At the center of the $12.8 Million suit were allegations that Cure Encapsulations had paid a website, amazonverifiedreviews.com, to specifically create and post a number of five star reviews in order to boost sales on Amazon in direct violation of prohibited seller practices. But while the case was the first specifically filed by the FTC, Amazon themselves have filed similar suits in federal courts as early as 2015, noting that paid reviews “threaten to undermine the trust that customers, and the vast majority of sellers and manufacturers, place in Amazon, thereby tarnishing Amazon’s brand.”
Both suits were not the last of their kind. Even to this day, numerous complaints are lodged both by and against Amazon alleging widespread review manipulation and fraud. Typically these reviews are relatively easy to spot, indicated by both unverified purchase status and information almost comically irrelevant to the product itself. But scammers are getting craftier. Last summer, thousands of Americans received unsolicited packages of seeds postmarked overseas as part of a brushing scheme, in which merchandise is sent to publicly available addresses in order to post 5 star reviews under the recipients name, earning verified purchase status in the process.
Not surprisingly, the origin of those packages was postmarked from China.
China and the Fake Review Economy
The Chinese eCommerce market may have accounted for an impressive $11.7 billion yuan in 2020 (approximately $1.8 Trillion USD.) But its regulatory policies are notoriously lax, leading to a burgeoning economy of both counterfeit goods, deceptive sales tactics and false advertising—not the least of which includes increasingly sophisticated forms of review manipulation.
Yet Amazon has always welcomed Chinese sellers, even going so far to host yearly global selling summits across numerous cities in Mainland China. The result of these summits has led to an influx of highly informed and diverse third-party sellers from all over the region, sparking a boost in cross border commerce; a fundamental necessity in the increasing competition between Amazon and China’s own Alibaba.
In 2018, Amazon was reportedly investigating complaints of leaked information about sales metrics and competitive reviews to sellers originating from bribed Chinese employees, including a service to delete negative reviews and restore bad seller accounts. Even more recently, a data breach in May 2021 revealed an additional fake review scam exposing a potential 13 million records also believed to have originated in China. As a result, Amazon recently issued a statement reemphasizing their commitment to halting fake reviews, noting that over 200 million false reviews were prevented from being published thanks to their detection in 2020 alone.
Sadly, that may not be enough to root out review manipulation entirely in China, where third party providers and social media networks have fostered an underground fake review economy.
Does Amazon Have An Uphill Battle?
Amazon reportedly spent the first three months of 2021 notifying social media networks of over 1,000 fake review groups, resulting in their elimination within 5 days. And in addition to May’s widely reported banning of 14 separate Chinese businesses found manipulating reviews, it was reported in June that Amazon had delisted three popular native brands from their marketplace—VAVA, Taotronics and RAVPower, resulting in an estimated loss of revenue of approximately 31 percent.
While Amazon’s role as “Earth’s Most Customercentric Company” continues to develop in new and innovative ways, both customers and sellers share a mutually inclusive relationship. And both interests should be aligned. As seller brandgating continues to grow stronger, it’s up to both parties to be proactive in ensuring objective reviews. Because like it or not, it’s not just Amazon’s reputation being tarnished by fake reviews.
It’s the reputation of digital commerce itself.
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