Amazon shuts down Chinese retailer’s 340 stores, freezes US$20 million of its funds…

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The retailer is Shenzhen Youkeshu Technology.

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One of the largest ‘Made in China, sold on Amazon’ companies had 340 stores closed, US$20 million in funds frozen amid crackdown

Stores run by Shenzhen Youkeshu Technology were shut down for allegedly violating Amazon’s rulesThe affected stores made up 30 per cent of Youkeshu’s total retail presence on the e-commerce platform

Iris Deng+ FOLLOW

Published: 1:30am, 9 Jul, 2021

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In what will be good news to many beleaguered US and UK sellers, Amazon has cracked down on hundreds of major Chinese sellers for apparently faking or manipulating product reviews. According to Marketplace Pulse, well-known consumer electronics brands including Mpow and Aukey were among the accounts suspended.

The suspensions affected almost 300 sellers based in China and dozens of top-selling products – representing $1 billion-plus in annual sales. Online review practices are a hot topic. Just last week, the UK’s Competition and Markets Authority began investigating Amazon and Google for not doing enough to combat fake or manipulated product reviews.

Review integrity is essential to how the Amazon marketplace operates. For sellers, they affect search ranking and conversion rates. For shoppers, genuine reviews allow them to have trust in Amazon, so they know that what they are purchasing is a good quality product that matches their needs. A broken review system undermines trust and favors sellers who are willing to use black-hat tactics.

Amazon’s aggressive recruitment of Chinese manufacturers came to light in January, and dubious review practices have been an open secret among sellers for years. The question is: how did it get this far before something was done?

Amazon finally takes decisive action

To get some perspective on what it took for Amazon to finally bring the hammer down, let’s roll back the clock a few years.

2015 email from a former Amazon executive (unearthed as part of a US government investigation) bragged about the marketplace being the best place for Chinese manufacturers to sell globally, and that Amazon had over 100 staff members dedicated to this growth venture. And indeed, Chinese sellers flooded the marketplace. By January 2021, the number of new Amazon sellers nearly doubled from 2020 to 2021, rising from 47% to 75% of all new sellers.

This wasn’t coincidence or pandemic-induced – it was by Amazon’s own design. While it wasn’t illegal or unscrupulous for Amazon to be recruiting more international sellers, it did acknowledge the effect on the marketplace in the aforementioned email: “the risky downside to this is that US and EU based sellers do not find this avalanche of China-based sellers very amusing”.

At the same time, Chinese manufacturers are notorious among the Amazon seller community for gaming the marketplace system in various ways, including fake reviews. This became exposed dramatically in May 2021, when a data leak from a server in China exposed over 13 million messages involving Amazon sellers offering to pay customers for favorable reviews.

This revelation implicated over 200,000 individuals, and – it seems – led to the beginning of Amazon suspending a number of large Chinese sellers. While the reasons for these suspensions weren’t publicly disclosed, it’s not a large leap to understand what is happening and why. Now, with the UK’s CMA putting further pressure on Amazon to prevent sellers from manipulating product reviews, we are seeing public evidence of long-overdue enforcement.

But why wait until now? With Amazon both simultaneously courting and shutting down large China-based manufacturers on the marketplace, the old adage of “you can’t have your cake and eat it too” comes to mind. While bringing bad actors to justice is the right thing to do, and helps level the playing field for many domestic sellers, it certainly seems that Amazon could have handled the situation better.

For more: https://www.webretailer.com/b/news-digest-2021-07-09/

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