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According to Marketplace Pulse, in 2018, Amazon Marketplace, its third-party vendor platform, had roughly 6 million sellers and growing. With sales at $175 billion, the Marketplace is over 70% of Amazon’s total sales of $232 billion and is over 30% of $500 billion US e-commerce sales.
Amazon Global Selling program has enabled cross-border transactions between sellers and buyers, thereby helping the company post stellar e-commerce market share growth. Behind every item for sale on Amazon Marketplace, there are numerous sellers, all fighting for the buy click. Most buyers don’t take notice that seamless services such as Fulfillment by Amazon (FBA) and Prime, maybe, are sourcing and delivering unqualified products from unvetted sellers from every nook and corner of the world.
While the growing Amazon Marketplace is attracting new sellers every day, it is also creating an unruly, frenzied out of control e-commerce environment. With each seller paying $39 per month, Amazon Marketplace is generating over $2.8 billion annual subscription revenue alone, plus a percentage of sales, and is very lucrative and profitable. The bigger the Marketplace gets, the harder it is to monitor the sellers and the products they sell.
For millions of independent sellers, online consumer product reviews are persuasive and potent inputs to the product purchase decision of buyers. The importance of increasing the clickthrough and conversion rates make the product reviews vulnerable to manipulations. Private Facebook groups, slack channels, subreddits, craigslist, and many more have created a shadow marketplace for buying and selling product reviews. Imran Tariq, co-founder, and CEO of Webmetrix Group, states, it is easy to game the system and to avoid detection, many sellers pay the review writers via Paypal, Venmo, and prepaid cards, etc.
The Amazon Marketplace has become a cesspool of unvetted merchants and unqualified products from all over the world. For a monthly subscription fee, sellers from across the globe are utilizing Amazon Marketplace to sell their merchandise to buyers in the USA, Canada, Europe, and other places, allowing many to circumvent the product sourcing rules, regulations, and protocols designed to protect consumers and workers. Many sellers also manipulate product reviews. The nefarious combination of unqualified products and manipulated reviews is creating an unfair and unhealthy e-commerce environment. The suppliers “who are playing by the rules” are at a disadvantage. Consumers and workers are potentially getting hurt.
Amazon states that all its Marketplace sellers “must follow our selling guidelines and those who don’t will be subject to action including potential removal of their account.” However, it is unclear whether Amazon has any mechanism to enforce, verify or audit compliance with the published guidelines. The company mostly relies on the sellers to comply with the rules and has a laissez-faire approach towards enlisting new sellers.
The steps to join the Amazon Marketplace as a seller are relatively straightforward. Most sellers and their product offerings are not required to meet ethical sourcing, supply chain compliance and product qualification certifications offered through international third-party auditors such as WRAP, SEDEX, BSCI, SGS, Bureau Veritas, Intertek, etc.
Amazon’s liberal seller enlisting process also attracts bad actors and dissuades vendors from investing in compliance programs. Compliant vendors are at a disadvantage in the Amazon Marketplace. If a seller misbehaves or perceived to have misbehaved, Amazon immediately suspends the seller account. The process to get the account reinstated is somewhat a black-box; the seller has to work via emails with an opaque department within Amazon. The misbehaviors on Amazon Marketplace result in consumers getting swindled or the seller losing their livelihood and struggling to get reinstated.
The laissez-faire supplier enlisting, and delisting policies have only upside and not much downside for Amazon. Torrid growth in the number of paying sellers on the Amazon Marketplace has created a self-feeding frenzy and is contributing significantly to Amazon top and bottom line growth. Amazon has no incentive to enforce supply chain compliance and product qualification certifications on its sellers, as it inevitably would shrink its supplier base and effectively constrict its fast-growing seller-based subscription revenue source.
E-commerce marketplace providers should grade sellers based on the level of supply chain and product qualification compliance, and award tiered seller ratings. Proprietary search algorithms should incorporate these tiered seller ratings as inputs, along with other inputs including the product reviews, to rank and present the search result-based product offerings to the buyers. The tiered seller ratings will convey confidence to the buyers and reduce scamming by bad actors.
Many online companies have started recognizing fake product reviews as a problem and are trying to combat the issue. To add veracity to reviews, Amazon has banned incentivized and paid reviews. To post a “Verified Purchase” product review, buyer must spend at least $50 on its Amazon account; should purchase the product at Amazon and pay at least 80% of the original value. Amazon algorithms also flag individuals leaving too many reviews and expunges such reviews.
Elizabeth Herrera, CEO of I Build Your Brand, has been a seller at Amazon for over seven years. She states that product review scamming is persistent and is the result of fast growth of the Amazon Marketplace, low barrier to seller entry and a cut-throat competition amongst sellers.
The bad actors use various strategies to game search algorithms:
- Post a large number of fake 5-star product reviews to boost sales.
- Post negative, untruthful reviews on competitors’ products, which in turn can depress the competitor product sales or outright suspension.
- Post a large number of 5-star positive fake reviews on competitor’ listings to get these reviews flagged as fraudulent and the products delisted.
- File fraudulent intellectual property (IP) infringement complaints, as well outright tampering of rival’s listings, classifications and even trademark files at the Patent and Trademark Office.
- Use bribery and kickbacks to Amazon employees to get internal competitive data and suspension/reinstatement of accounts in the Amazon Marketplace.
There are a few warning and tell-tale signs that can help buyers spot fake product reviews:
- Too many 5-star product reviews posted within a short time, having similar wording and staged product images.
- 5-star product reviews with brief content and superlative adjectives describing product features and benefits.
- Generic products with a large number of positive reviews, i.e., electric cables, phone protectors, power adapters, etc.
- No seller company website or contact information hence, limited recourse to return and/or enforce claims.
- Newly launched sellers and/or long delivery time. The seller might take the money and close the listing.
- The review writer has a history of leaving 5-star reviews.
- Inconsistent product reviews on alternate e-commerce sites. For example, if a product gets terrible reviews on eBay, BestBuy, Walmart, etc., but is highly praised on Amazon Marketplace, it could be a sign that the seller is gaming the system.
There are also online tools available to qualify fake product reviews. Companies such as Fakespot, ReviewMeta, etc. offer analytic tools that analyze and sort product reviews on Amazon, eBay, and other online shopping sites. Simply copy the product’s link into the analytic tool search engine to get the quality rating on the product’s reviews.
Amazon Marketplace, the biggest online shopping platform offers global reach and e-commerce services to millions of buyers and sellers. However, Amazon is lacking the checks and balances in its sellers enlisting process. To pursue continued torrid growth, the Amazon Marketplace has morphed into a “chaotic bazaar” of millions of unvetted sellers and unmanaged fake product reviews.
While consumers need to use discretion, the onus of reducing scamming in its Marketplace lies primarily with Amazon. Robust supply chain and product qualification processes need to be implemented for provisioning sellers. Such a practice will weed out many bad actors and create a fair and healthy market place for all.
April 1, 2019 at 03:09PM
Forbes – Entrepreneurs