Amazon said it has shut down about 600 online third-party sellers selling approximately 3,000 Chinese brands on its marketplace as part of its ongoing crackdown on fake reviews.
Cindy Tai, Amazon’s vice president for Asia Global Selling, revealed these numbers in an interview with China Central Television, as reported by the South China Morning Post (SCMP).
She also indicated that these actions were not just aimed at Chinese sellers and despite closing so many Chinese seller accounts, it did not negatively affect the overall growth of Chinese sellers on Amazon.
However, in August, the Chinese government created a rescue fund system to help sellers set up direct stores in order to overcome Amazon’s bans.
This seems to suggest that many unscrupulous Chinese sellers were significantly impacted by the Amazon crackdown and threatened the “made in China, sold on Amazon” business model.
Amazon on Global Crackdown of Fake Reviews
Amazon has been on a global mission for years to remove fake reviews and, when necessary, remove sellers that violate its Anti-Manipulation Policy for Customer Reviews.
“Customers rely on the accuracy and authenticity of product reviews to make informed purchasing decisions and we have clear policies for both reviewers and selling partners that prohibit abuse of our community features We suspend, ban and take legal action against those who violate these policies, wherever they are in the world.”Amazon spokesperson in an emailed statement to SCMP
Earlier this year, the company confirmed it stopped more than 200 million suspected fake reviews in 2020 before they were published on the Amazon platform.
While Amazon’s Tai may say this has not impacted Chinese seller growth on the platform, the actions against fake reviews do seem to have escalated recently, entangling even large Chinese sellers.
According to the SCMP article, some of the biggest Chinese brands on Amazon have been hit by the company’s crackdown – including Aukey, Mpow and Shenzhen Youkeshu Technology Co. – the latter claiming Amazon froze more than 130 million yuan (US$20 million) of its funds.
The bailout offered by the Chinese government is supposed to help sellers overcome this cash flow problem by assisting them with the setup of D2C (Direct to Consumer) stores.
However, this still has the potential to deceive buyers, since the companies may flood their own stores with fake reviews without any oversight from Amazon or other reputable marketplaces.
The Chinese government’s bailout cash doesn’t seem to come with many strings attached, like stopping unscrupulous business practices. Chinese brands and sellers simply have to be “best-in-class cross-border service providers.” What those criteria involve is anyone’s guess.
Also, according to the Shenzhen Cross-Border E-Commerce Association, the crackdown has led some Chinese merchants to begin investing more in international online marketplaces such as eBay and AliExpress.
Nevertheless, switching to other marketplaces may only be a short-term solution since many online selling platforms have similar feedback and review policies as Amazon or offer buyer protections that would enable consumers to get easy refunds when not satisfied with a product.
In addition, many online sales platforms do not allow for as extensive reviews as Amazon, probably reducing the “marketing” impact of publishing fake reviews.
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