Amazon bans more than 50,000 Chinese sellers for alleged fake reviews and other violations. Chinese netizens: Well done!
2021 is a challenging year for Amazon’s Chinese sellers. A crackdown by the US-based e-commerce platform against Chinese companies has been in progress since April. According to the Shenzhen Cross-border E-commerce Association, Amazon has banned more than 50,000 Chinese sellers as of July 2021, leaving multi-billion-dollar revenue losses for top sellers and bankruptcy for midsize ones. Shenzhen Youkeshu Technology co., Ltd., one of Amazon’s largest Chinese retailers, has 340 stores banned or frozen with more than RMB130 million (US$20 million) frozen in their accounts, according to its Shenzhen-listed parent company TIZA Information Industry Co., INC.
A statement by TIZA provided a list of Youkeshu’s violations that led to the massive banning, including low fulfillment rate, fake reviews, unauthorized listings, counterfeit, etc., which reveals some typical “Chinese e-commerce practices” that Chinese consumers have condemned for a long time.
Companies like Youkeshu operate in a model of massive stores or dianqun, which means they list up to a million products in thousands of stores they bought. With that much amount of SKU, it is hard to keep a good performance for each store, which brings terrible experiences for buyers.
“Brushing”, known as shuadan in China, is a process that “brushers” place fake orders to help sellers build higher sales that can bring better placement on e-commerce platforms, leading in turn to more sales. Brushing and paid review are almost standard practices to trick the algorithm of e-commerce marketplaces and boost online sales in China. Amazon’s Chinese merchants did not give up that shortcut. There is a whole value chain of brushing and selling reviews: countless Facebook groups filled with “reviewers” buy off Amazon, leave a nice detailed review, and get refunded via PayPal from the seller later; websites that offer reviews in bulk; and most commonly, vouchers come with the packages that provide cashback for good reviews. Companies even set up dedicated job positions for fake reviews on their listings.
Illegal But a Norm in China
In China, it is an open secret or a hidden rule that to succeed in e-commerce, sellers must buy reviews. Despite regular crackdowns by the state, cheating is so common in e-commerce businesses that consumers just stopped to read the reviews. To make it seem more legit, sellers even pay for some bad reviews, focusing on not so essential flaws such as logistics. And then, the shop owner would reply and solve any of the problems mentioned in the bad reviews on the thread to show good customer service. They also buy bad reviews that seem real for their competitors’ listings. There is a whole industry of fake transactions and fake reviews that supports any product or service listed online. To improve the ranking of your listings on a famous hotel booking platform, you can order fake orders for RMB20 (US$3) each. A good review takes an extra RMB5 (US$0.8). There is no official number, but a report by iiMedia Research indicated that the fake sales industry is worth more than RMB600 billion (US$92.9 billion) by 2016.
How it Works
The most common process of brushing:
the seller sends the requirement to the brushing organization
the organization dispatches the task to brushers
the brushers search for the product, pretend to compare, chat with the seller, add the product to the cart, place orders, leave five-star reviews, and get refunded plus commission outside the e-commerce platform
Is an Honest Market too Good for Chinese Consumers?
Another iiMedia Research report suggested that nearly 70% of China’s live streaming e-commerce users believe there is data fraud in this business. The e-commerce platform showed more than three million views on some live streaming, but only 110,000 of them are real users.
The Amazon crackdown has caused a stir in China. Even though thousands of workers lost their jobs overnight when companies decide to close down after Amazon banned all of their stores, Chinese consumers showed their understanding and support and even wished Chinese e-commerce giants would do the same. The topic was trending on Zhihu, the Chinese version of Quora, for days. The question “How do you feel about Amazon’s harsh banning of 50,000 Chinese sellers, causing losses of over 100 billion?” received thousands of answers and comments, most of which are supportive of Amazon. An anonymous user who claims to be an old Youkeshu employee put in the thread that “they deserve it. They used nice product pictures in their campaigns and on their websites, but the products they sent to buyers are nothing like what they advertised. It is a complete fraud. I left because I felt bad for the buyers and did not see any future in that company”.