Why did Amazon ban 3,000 Chinese-backed online stores?
- Amazon, the world’s largest e-commerce company, had closed about 3,000 merchant accounts that were backed by 600 Chinese brands on its platform.
- The vendors were caught offering rewards, including gift cards, for customers leaving reviews.
Amazon sold an estimated US$295 billion worth of products from various brands worldwide in 2020, with many sellers successfully trading through high-turnover online storefronts. The impressive sale however is not one without competition. In fact, the rivalry can be so fierce that some sellers decided to game Amazon’s system.
Amazon, in its fake review crackdown recently, has come to realize there are numerous sellers that have been manipulating reviews over the years. Basically, taking advantage of the online shopping frenzy, sellers have gradually been adopting new methods to bolster ratings on products. From a shopper’s point of view, this can mean diminished overall trust and frustration, as they try to pick a winner from a crowded field of low-quality, no-name “five-star” items, mostly from China.
But from the online retailer giant’s point of view, enough is enough. Amazon most recently racked down on 600 Chinese brands on its platform. The world’s largest e-commerce company reportedly said that it had closed about 3,000 merchant accounts that were backed by these brands.
According to the report by South China Morning Post, Amazon’s Asia Global Selling Vice President Cindy Tai told state-owned China Central Television that the company’s crackdown on these brands was not a means to target China or any other country. She also suggested that the campaign did not negatively affect the overall growth of Chinese merchants on the online shopping platform.
It is, however, unclear how many non-Chinese brands have faced bans but the crackdown affected thousands of Chinese merchants, suggests a July report by the trade group Shenzhen Cross-Border E-commerce Association. The report also highlighted that Amazon had closed 340 of YKS’s online stores and frozen over US$20 million worth of its assets.
Fake reviews — an age-old issue for Amazon
Amazon reviews are a powerful tool as they help customers determine product quality and authenticity. For sellers, reviews are even more critical. More feedback can mean a higher ranking in user searches. But not all sellers are playing by the rules. Instead of earning great reviews through top-notch products, some have chosen the path of review manipulation.
The crackdown began in earnest five months earlier, but it received wider attention when Amazon banned Aukey and Mpow — some of the most successful sellers on Amazon with products with tens of thousands of reviews. Suspending of sellers begins at the end of April this year.
The vendors were caught offering rewards, including gift cards, for customers leaving reviews. Amazon later booted RAVPower, Vava, and other relatively well-known brands for similar behavior.
All of the brands violated product review policies by Amazon, which stipulate that sellers can only request a review; they can’t ask for a high rating or incentivize feedback through discounts or refunds. Suspending them is perhaps Amazon’s most notable and substantial enforcement of its rules yet.
Amazon’s current crackdown is thought to be greater in scale than any of its previous campaigns. The retail giant also intends to continue improving abuse detection and take enforcement action against bad actors, including those that knowingly engage in multiple and repeated policy violations, including review abuse. It is safe to say the wider anti-fraud strategy would eventually significantly change Amazon’s marketplace.