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Amazon tells sellers to stop offering free products in exchange for reviews

October 7, 2016 09:00 AM
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Amazon.com Inc. is cracking down on the way marketplace sellers get their products reviewed.

With hundreds of millions of products listed on Amazon.com, it can be a challenge for shoppers to find what they want, and a challenge for Amazon sellers to ensure their products show up high in search results. Some sellers offer customers discounted—sometimes even free—products to customers who agree to post a review of the product. Amazon allowed this practice so long as the reviewers disclosed within the reviews that they received the product in exchange for promising to write a review.  

That’s no longer the case.

Amazon now prohibits “offering compensation or requesting compensation (including free and discounted products) in exchange for creating, modifying or posting content,” the online retailer told its U.S. sellers this week. Sellers can still offer discounts and promotions as long as they are not in exchange for reviews. This has only been announced in the U.S. thus far. Changes apply to all product categories except books. Amazon will continue to allow publishers to provide advance review copies of books.

But Amazon is not applying the policy to goods it sells itself. The e-retailer operates a service called Amazon Vine that provides certain customers free samples of items Amazon sells on its own behalf  to review. Amazon selects customers based on their reviewer ranking, “which is a reflection of the quality and helpfulness of their reviews as judged by other Amazon customers,” according to Amazon, No. 1 in the Internet Retailer 2016 Top 500 Guide.

Suppliers that sell items to Amazon on a wholesale basis pay Amazon a fee for the service and can’t influence whether the rating is positive or negative, Amazon says. Customers aren’t paid to write the review, and Amazon says it limits the number of Vine reviews on products. For now, Amazon Vine is not available to Amazon’s third-party marketplace sellers; it’s only available to manufacturers that sell inventory to Amazon.

“This is a huge deal,” Eric Heller, CEO and founder of consulting firm Marketplace Ignition, says. “If Amazon enforces this not just by policy but by systemically monitoring it, meaning they build out a system to monitor if the order that generated the review was at a discount, it could have a widespread effect. I would guess a high proportion of sellers, and certainly the savviest ones, are using these methods.”

This rule comes at a time when Amazon has been taking heat for biased reviews on its site.

Technology research company ReviewMeta in September analyzed 7 million Amazon reviews and concluded that 30% of those reviews were “incentivized,” in that the reviewer received the product for free or at a discount. The incentivized reviews, which totaled more than 2 million in ReviewMeta’s dataset, had an average rating of 4.74 stars on Amazon. More than 5 million other reviews that weren’t incentivized averaged a lower rating of 4.36 stars. The company says the 0.38 difference can determine whether a product is considered average or becomes a top-rated product because the average product on Amazon is rated about 4.4 stars, according to ReviewMeta.

Further breaking down its data, ReviewMeta says incentivized reviewers are 12 times less likely to give a 1-star rating than non-incentivized reviews, and almost four times less likely to leave a critical review in general. What’s more, incentivized reviews account for more than half of new reviews submitted to Amazon, based on ReviewMeta data.

The practice of giving free merchandise to reviewers is not limited to Amazon. Some review sites, such as ILoveToReview.com, AMZ Tracker and many others, allow sellers to determine which reviewers will receive their discounted products, and may make that choice based on the reviewer’s average star rating. As a result, buyers that received discounted or free products in exchange for reviews may be motivated to leave mostly positive reviews so that they are more likely to continue receiving discounted products, says technology and research company ReviewMeta. 

“Amazon’s intent with this change is to maintain the integrity of their review system,” says Jeff Cohen, director of business development at Seller Labs, which offers services to marketplace sellers. One service Seller Labs offers is Snagshout, a platform that enables sellers to offer heavily discounted products to shoppers who had the option to write reviews on those products. Although it was never required for shoppers to write reviews, it was implied that they would, Cohen says.

After Amazon’s announcement this week, Snagshout has since removed Amazon review requests from its website, and notified shoppers that they can get discounted products without posting reviews.

“It freaks everybody out when Amazon makes a change because they [sellers] were taught a system,” Cohen says. “It is really important for sellers to get reviews. They won’t get them [as quickly], but that’s OK. That’s the big thing here: The world has changed, and that’s OK.” That’s because sellers can still get reviews on products organically—meaning without providing discounted items to reviewers—Cohen says. “The ones that succeed on Amazon are the ones that can adapt when Amazon makes changes to its platform,” he says.

The fact remains that reviews are important for marketplace sellers, particularly when launching new products. An Internet Retailer online survey of 200 consumers in May found that 52% of shoppers always look at ratings and reviews when shopping on online marketplaces and usually base purchase decisions on them. 42% said they sometimes look at ratings and reviews, and only 6% said they never look at reviews.

“You can still discount your products, and there are no restrictions on requesting reviews. You just can’t receive one in exchange for the other,” Heller says. “Sellers can still do those two things without violating Amazon’s policies.”

Review groups or websites like the ones Amazon banned were often used by sellers when launching new products, Heller says. Amazon sellers can still benefit from using these websites, like Snagshout, to offer discounted products (without requesting reviews in exchange) because it’s one way to get new products in front of buyers, both Heller and Cohen say. Increasing paid search marketing and bolstering social media marketing are also ways Amazon sellers can launch new products and still abide by Amazon’s new rules.

From the marketplace seller’s perspective, this restriction isn’t all bad news. “We think it will begin to restore faith that customer reviews are not paid for,” Jason Boyce, co-founder and CEO of online sporting goods retailer and manufacturer Dazadi Inc., which sells on Amazon. “It will hurt us when launching a brand-new item, but there may be other ways to give those items more support.” 

Dazadi Inc., No. 673 in the Internet Retailer 2016 Top 1000 has used private product review groups, such as those Amazon is now prohibiting, for some of its products. The retailer used review groups because they provided data on delivered goods, which helped it improve products and packaging, Boyce says. They also helped Dazadi get more product reviews, and provided temporary spikes in Amazon search rankings when the merchant launched new items.

“We will likely continue to use [review groups] to help our product development team fine-tune our products, but we will no longer allow the product review groups to leave reviews,” Boyce says.

Retailers that sell small-ticket items that tend to give away large volumes of products a month in order to maintain sales rank are more likely to be hurt by this change, Boyce says. For instance, if a merchant sells a $14 product, it’s more able to give away 100 or more of those products for free in exchange for reviews—something that has helped sellers boost their Amazon search rankings. But Dazadi, which sells more expensive items such as fitness equipment, is unable to give away lots of products to reviewers, Boyce says.

Some say Amazon’s new ban will affect newer sellers on Amazon more than those that have been selling on Amazon for some time. “I don’t care about this new rule—it doesn’t affect me because I’ve been grandfathered into Amazon. I’ve been selling on Amazon for years,” says Will Tjernlund, an Amazon seller that lists his products on Amazon as a marketplace seller, and sells inventory to Amazon, which then sells the products itself. “I have maintained rank on my products and already have a base of customers and legitimate reviews,” he adds. But for new sellers, it will be more challenging to get their products noticed on Amazon, he says. Tjernlund sells a variety of products across different categories on Amazon, including ventilation and cooling equipment, which his family manufactures.

For David Rifkin, president and CEO of Microfiber Products, Amazon’s new rule is good news. While his company has never offered discounted products in exchange for reviews, Microfiber Products’ competitors have, and that has hurt his company’s rankings, margins and sales on Amazon, Rifkin says.

“We noticed that the competition has come with artificial reviews and lower prices. We didn’t want to have those reviews, so we’ve had to lower our prices,” he says. One mop, for instance, has lost ranking in Amazon’s search results in the past year and a half, and the retailer has lowered the price to $12.95 from $18.95, he says.

“The product used to be one of the top-five ranked mops, but now it has been bumped down to the second page because it doesn’t have as many reviews,” Rifkin says.

Other sellers took to Amazon’s web community forum to comment on the policy change, and their responses were mixed.

One unnamed seller is happy with the new review policy: “I wonder what took so long. I can’t compete with these sellers giving away thousands of products and driving me out of the catalog listing.”

But other sellers say that without reviews their products will be difficult to find: “For sellers in high-competition markets competing with name brands, how do we get reviews now?”

Another person on the forum expressed concern about the number of changes Amazon has made in the last few months: “So, given the massive Amazon catalog, new products come out. How do you get that found? Sure, you can do PPC, but that costs, and often advertisers go after the broad keyword/phrase, meaning you still won’t be found.

“The size and scope of changes Amazon has been making lately scare the @##@ out of me,” the seller continued. “Brand gating. Review changes. Nov./Dec. FBA fee increases. They happen suddenly, and impact the businesses of Amazon’s main profit center in a big way…What’s next?”

 

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