Amazon: The Market for False Positives

By Brett Scully

Social proof, the psychological pitfall where people conform out of a genuine belief that others are correct, builds the foundation of why Amazon reviews are so important, but also dangerous.  How many Amazon reviews are genuine experiences versus opportunists looking for a quick buck?

On 3 October 2016, Amazon announced that “incentivized” Amazon reviews were to be banned from their site.  A recent study from ReviewMeta demonstrated that the average review of incentivized reviews was 0.38 stars higher than non-incentivized reviews, a jump of 40 percentile points on product review averages.  This ruling was of course expected, but Amazon’s crackdown has been far from effective.  Wouldn’t you think that Amazon would rush to restore trust among its consumers? Maybe not, and here’s why.

Despite the rise in modern skepticism, 65.0% of us still trust online reviews and 82.0% check reviews before a purchase.  This is an important metric for Amazon; the more positive reviews that are on their site, the more likely a customer is to convert into a sale.  According to FakeSpot, a tool designed to breakdown fake reviews, some product categories such as electronics, beauty and sneakers, have on average 64.0% more fake reviews than they do real ones. 

The main culprit of these fake reviews are Chinese sellers who are able to offer incredibly low prices on products that US sellers aren’t likely to be able to compete with.  In 2017, roughly 25.0% of Amazon sellers were estimated to be from China.  With an average increase of 100.0% per 6 months in Chinese sellers, this figure has now reached 40.0% today.  Given this incredible growth and the fact that Amazon still makes money from these fraudulent purchases, it makes sense why Amazon may be turning a blind eye to proactively preventing this behavior.

Now, how does this all work? How are these Chinese sellers pulling off these schemes on a grand scale? Here’s how this system works:

  1. Sellers post their products on private Facebook groups or WeChat groups, offering members a full refund and commission if they buy the product and leave a 5 star review.
  2. If the buyer is interested, they message the seller, receive keywords to search for to the find the products, and send the order number for tracking purposes to the seller.
  3. After the buyer receives their product, they post their biased 5-star review and in return, receive a full refund through PayPal, plus commission, all while getting to keep their brand new product.
  4. Rinse and repeat these steps hundreds of times, and you now have a top listed product on Amazon with tons of 5 star reviews and seller feedback.

Consumers generally like affordable, quality products, and Chinese sellers bring a plethora of cheap products to the US markets, with the illusion of quality.  This fake social proof can push someone to buy a $5.00 charging cable that they maybe wouldn’t have purchased without the 5-star tag.  That impulse driven mindset is exactly what Amazon wants and is why they seem to barely scratch the surface when fighting against this black market trade.

With roughly one million Chinese sellers (40.0% of all sellers) on the market generating roughly $115.0 billion in revenues on Amazon, it’s clear that being more active on banning these sellers would hurt Amazon’s bottom line. Amazon estimates that only 1.0% of its reviews are fraudulent. However, this number doesn’t paint the entire picture of the vast fraudulence within the industries that these sellers thrive in: electronics, clothing, and beauty.

Given Amazon’s clear lack of proactivity in fighting this system, how can you best protect yourself from false reviews?

  1. Use websites like ReviewMeta and FakeSpot to analyze the reviews of the products you’re interested in.  These sites give you a good idea whether or not the seller is picking up black market reviews.
  2. Avoid both 1 and 5 star reviews.  Generally, these extremes don’t offer proper criticism of the products true value.  5 star reviews will generally be fake or low-effort reviews, whilst 1 star reviews are often competitor driven negativity, or emotionally impulsive responses.

In the end, as long as buyers continue to use and trust Amazon, these sellers will continue to be successful in playing the system.  Without bad public relations forcing Amazon to put necessary initiatives in place to prevent this issue, Amazon will simply continue to ride the profit wave that comes with a surge of market competition.

Featured photo by Tobias Dziuba.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s