Selling on Amazon is HUGE in China. In fact, by our own research, Chinese sellers make up over 63% of all third-party sellers on Amazon.
In this article, we'll look at how many Chinese sellers there are and the tactics being used by Chinese Amazon sellers to manipulate the platform. We'll also re-explore some of the old tricks they've been using for some time now.
How Many Chinese Amazon Sellers Are There?
According to our last research (see our related article Amazon Third Party Seller Breakdown by Country) over 63% of third-party sellers are from either mainland China or Hong Kong.
Top Amazon sellers by country
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Sellers from the United States by comparison make up just 34.8% of all third-party sellers.
It's also estimated that there are 1,500,000 active sellers on Amazon. So by doing some simple math, there are likely close to a million Chinese third-party sellers on Amazon.
How Do You Identify a Chinese Seller on Amazon?
Amazon has made it very easy to determine if a seller is Chinese. In 2020, it started revealing every seller's address information. All you need to do is click a third-party seller's name, and it will bring up that Seller's address.
Why Are There So Many Chinese Sellers?
Let's start off with a love triangle: Amazon is in love with Chinese entrepreneurs, Chinese entrepreneurs are in love with Amazon, and the Chinese government is in love with Amazon. Let's examine why this love affair exists and also how many Chinese sellers there are.
Why Chinese Entrepreneurs Love Amazon
There are arguably a few other countries as comfortable with ecommerce as China. The two largest sites in China, JD.com and Taobao.com have, respectively, $67 billion and $40 billion in revenue (which, when combined, is over 40% more than Amazon's revenue). Chinese marketplaces such as Aliexpress, Wish and TEMU have soared in popularity with American consumers recently as well. When you combine this with China's rich manufacturing background, it's no wonder the dream of selling on Amazon is huge.
There is also no shortage of online marketers selling this dream. One popular Chinese e-learning website has dozens of courses covering every selling on Amazon topic imaginable at prices ranging from $5 to $100.
Why Amazon Loves Chinese Sellers
Amazon's mission is to provide customers with the lowest-priced products possible. Part of the way to achieve this is to deliver the flattest supply chain, and that means getting sellers as close to Chinese factories as possible.
One of the ways Amazon actively recruits more sellers is by routinely holding summits in Mainland China. These conferences are now held in several cities across the country each year and attract thousands of people, both those already selling on Amazon and those looking to sell on Amazon.
Just How Much Are Your Competitors Importing from China?
It's not just Chinese sellers—your US-based competitors are selling products from China, too.
Custom import records are public information in the United States, and there are multiple tools that allow you to simply search for a company name and see exactly how much these companies are importing from China.
My favorite tool for this is Jungle Scout's Supplier Database tool which costs less than $50 a month (other more expensive options include Import Genius and Panjiva). These tools will neatly summarize all the information included on a particular company's Bill of Lading information such as product type, quantity, and supplier name/address.
Why the Chinese Government Loves Amazon
At the same time, the Chinese government is hungry for anything cross-border e-commerce. Why? Cross-border e-commerce means exports, something the Chinese government is desperate for, especially in the midst of plummeting exports after COVID and a wider trade war with the United States.
The majority of Chinese Amazon sellers are based in China's Silicon Valley, Shenzhen. In Shenzhen, the Chinese government has helped develop numerous industrial parks such as China South City (华南城) devoted almost entirely to e-commerce sellers. Provincial governments have also gotten on board like Zhejiang, that has developed “Cross-border E-Commerce Experimental Zones” focused on promoting cross-border ecommerce to local manufacturers and sellers (Zhejiang claimed to have over roughly 80,000 cross-border sellers).
What Black Hat Tactics Are Chinese Sellers Using to Get Ahead?
There are several malicious selling strategies being used by Chinese sellers including:
- Fake reviews
- Counterfeit products
- Sabotaging competitors' product listings
- Variation abuse
- Stealing internal Amazon data
I'll review how each of these tactics is employed below.
Using Fake Reviews to Mislead Buyers
It's no secret that Amazon customer reviews are one of the most important factors affecting a customer's purchase decision on Amazon. So it's no surprise that it's also one of the most frequently abused tactics by Chinese sellers.
Zach Franklin of AMZKungfu is originally from Detroit but now lives in Shenzhen, China, and is a popular non-Chinese Amazon consultant for Chinese sellers. He explained to me that in his experience, at least 50% of Chinese sellers are using some form of review strategy against Amazon's terms of service. As Zach described to me, “To many Chinese Amazon sellers, the question of how to succeed on Amazon has a simple answer: reviews equal sales.”
A Chinese seller's review strategy can come in one of two varieties: compensating/reimbursing real customers for leaving a positive review, or the more extreme technique of making fake orders and leaving positive reviews through zombie Amazon accounts. Amazon fought feverishly to crack down on fake reviews (and the FTC has even stepped in, in certain cases) but fake reviews remain a huge issue in 2023.
Fake review companies (almost always in China) open hundreds or thousands of fake Amazon accounts known as “zombie accounts.” They then emulate real customer browsing behavior so as not to arouse Amazon’s suspicions. According to one Chinese selling consultant who wished to remain anonymous, fake reviews generally start at $3 to $5 depending on how likely or not these fake reviews are to be detected by Amazon.
Part of a seller's review strategy involves obtaining as many reviews as possible. However, another part of a review strategy is also diminishing the prevalence of negative reviews.
Whether a review shows near the top position of all reviews depends, at least partially, on the number upvotes or downvotes it has. Unsurprisingly, there are services available which will help upvote a positive review in hopes of displacing negative reviews.
Amazon's Mass Fake Review Suspension of 2021
The suspensions were exceptional not only in the sheer volume of sellers suspended but also the size of some sellers, with some of the largest brands on Amazon at the time also being suspended, including Aukey and Mpow.
Counterfeit Products and Listing Hijacking
The next malicious way in which Chinese sellers are getting ahead is by offering counterfeit products.
Amazon has a GIANT counterfeit product problem. In its earning report earlier in the year, Amazon admitted as much stating “We also may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies… In addition… we could face civil or criminal liability for unlawful activities by our sellers.”
The problem largely circles back to the fact that Amazon is a marketplace like eBay that allows multiple sellers to sell the same item. Amazon does not actively audit items sent into its warehouses to determine if they are genuine products or not. Instead, it rests strictly on whether the item has the correct UPC barcode or not. A malicious seller can simply print a fake UPC bar code, apply it to their counterfeit item, and Amazon will deem it to be a genuine product.
This is an issue that we at EcomCrew, as sellers, have experienced firsthand. It's also one of the problems many members of EcomCrew Premium have experienced as well. One member, Joe Cochran, posted in our private community recently “We've battled counterfeit sellers every year since we developed our brand and have lost tens of thousands battling them.”
The issue of counterfeit products, along with fake reviews, is one of the greatest threats to Amazon and they have taken several measures to counter the prevalence of fake products. Amazon implemented the Transparency program in 2018 that gives sellers exclusive and trackable barcodes for its items. Earlier in the year, they also rolled out Project Zero which gives sellers the greater ability to remove counterfeit sellers from their listings.
While both the Transparency and Project Zero programs are positive steps in the right direction, it does not remove the problem of counterfeits entirely. The onus is still on sellers to monitor their listings and all of the Amazon marketplace to ensure no counterfeiters exist.
Leaked Competitor Information from Amazon Employees
In 2018, EcomCrew broke the news that Amazon employees were stealing and selling internal reports about sellers to their competitors. Several mainstream media outlets, including the Wall Street Journal, picked up the story and Amazon insisted they would crack down on such leaks, “We hold our employees to a high ethical standard and anyone in violation of our code faces discipline, including termination and potential legal and criminal penalties.”
Amazon and the Department of Justice in America aggressively perused anyone guilty of participating in this stealing of information (including the arrest and sentencing of a high-profile Amazon lawyer), but the practice continues well into 2023.
Numerous resellers still offer internal ASIN reports, as seen in the screenshot above. Moreover, in 2023, it was widely reported that Telegram groups were openly and publicly still advertising account annotations for sale (internal Amazon reports that show employees' notes made about a seller).
This is how it works: mid to senior-ranking employees within Amazon China have direct access to Amazon’s internal network which allows them to access private information related to all sellers. Corrupt Amazon employees will steal a business report of any desired competitor showing information such as how many times a product was viewed over a period, how many times a product was purchased, and the total sales of those items.
Chinese employees will also resell Amazon customer information. This information can be used in a variety of ways—everything from privately contacting a customer to ask them to remove a negative review in exchange for some type of payoff, all the way up to running advertising campaigns directed towards those customers.
Prices for these reports range widely (invariably, the reports are cheaper from Chinese-only websites). A stolen report can start at $20 per piece while individual customer records can go for $3. As one Chinese reseller of this information described to me (he wished to remain anonymous), the price will depend on the riskiness of that employee accessing that information, i.e., the chances of them getting fired.
Competitor listing sabotage is a frequent strategy used by malicious sellers.
In July 2023, it was widely reported that at least one Telegram group was openly advertising competitor sabotage. Among other things, the service providers are advertising a promise to remove a seller's product listing page for some period of time (the length of time is not guaranteed though).
Generally, how this service works is that malicious keywords are injected into a competitor's listing unbeknownst to them to trigger certain Amazon algorithm bots to remove a product. The most common malicious keywords are of a sexual nature (Amazon has strict guidelines around adult products), hazardous nature (e.g., pesticides) or a health risk (e.g., injecting certain COVID keywords like Ivermectin).
How does one edit a competitor's listing though? Amazon allows many sellers to use the same listing. It works under a “community contribution” principle (not dissimilar to Wikipedia) where any seller can potentially edit a listing. The premise is that the community will decide the best pictures to describe a product, the description, etc. Community contributions work most of the time, but sometimes, malicious actors get out of hand, like when The North Face altered dozens of Wikipedia pages to plug its gear. The same thing happens with Amazon.
Amazon has a complicated hierarchy for determining what suggested changes are implemented and which are not. Malicious sellers have figured out that Vendor Central clients, i.e. vendors who sell products to Amazon as opposed to on Amazon, have the highest priority. Subsequently, phony Vendor Central accounts are a hot commodity in the world of black market Amazon services selling. Additionally, internal Amazon employees can be bribed into making the changes themselves which almost always supersede any user-contributions.
Keyword injection isn't the only form of listing sabotage though. For instance, during Christmas 2018, a malicious competitor altered nearly every listing of yoga balls on the first page of Amazon's search results to show a picture of a PlayStation 4 instead of yoga balls. The consequence? Confused customers either chose not to buy the yoga balls at all or, worse, they bought what they thought were PlayStation 4s and received yoga balls instead.
On Amazon, a product may have several variations. For example, a shirt may come in several different colors or an Instant Pot may come in different sizes.
Again, based on the community contribution model, any seller may potentially add a variation to an existing product. This works fine when a seller adds a variation as a customer would expect, such as a different size or color. Where clever sellers are gaming the system is to add a completely different product to ‘absorb the review juice' from the existing listing.
For example, if I decided to start selling kitchen spatulas I could potentially add my spatula as a different variation to the Instant Pot listing above and it would appear as though my brand new kitchen spatula had 37,970 reviews as, in most cases, Amazon pools reviews across all variations.
Often though, adding a completely different product as a variation to a popular product gets noticed by Amazon and customers pretty quickly. So clever sellers are going so far as to search for discontinued products in Amazon's catalog with lots of reviews and add their items as variations to these listings so as not to raise any suspicion.
Secret “Stealth” Amazon Selling Accounts
Amazon is quick to suspend sellers when it detects behavior that goes against its terms of service. Not only do those sellers lose their ability to sell on Amazon, but they also lose the ability to sell potentially hundreds of thousands of dollars or even millions of dollars in inventory. Given these risks, many Chinese sellers secretly open several Amazon Seller Central accounts, called “Stealth Accounts” despite this being strictly against Amazon’s terms of service.
Having multiple seller accounts is not forbidden on Amazon but Amazon is very good at linking these accounts and if one account gets suspended typically all the accounts owned by that seller will be suspended as well. Because of this, sellers go to great lengths to hide the identity of these accounts – many Chinese sellers require their staff to open accounts under their names but under the control of their company. These accounts are often even used with separate internet service providers to avoid Amazon detecting any IP sharing.
An associate of mine who previously worked for a large Chinese Amazon seller in the pet industry described it to me this way, “In our company, we literally needed a diagram detailing all of our selling accounts so our staff could keep track of these accounts”.
Duty/Tariff Avoidance, Invoice Manipulation and HS Code Misclassification
There's one final way that Chinese sellers are getting an edge on domestic sellers and that's via avoiding paying the appropriate duties when importing into America.
Since the start of the trade war in 2016, most products from China have duties well above 25% but many Chinese sellers avoid paying these duties altogether via deliberate invoice fraud and HS Code misclassification. The result is their costs are lower and they're able to get an unfair advantage over sellers honestly importing their products.
The amount of duties that one must pay is directly related to the cost of those products declared to U.S. Customs and Border Patrol (CBP). To get around this, many sellers will deliberately under-declare the true cost of their products to CBP by falsifying invoices. The result can be major savings on duties. Unfortunately, CBP has very few tools at its disposal to verify these invoices of foreign sellers and Amazon has little incentive to verify this information either, even when a seller uses Amazon's own custom broker.
The other way Chinese sellers can avoid paying duties is to deliberately misclassify what type of products they are importing. Certain classes of products (referred to as HS Codes when importing) are exempt from duties and by using one of these HS Codes an importer can potentially avoid paying all duties altogether. I've personally worked closely with many Chinese suppliers who also sell on Amazon over the years and nearly everyone has admitted to me to they under-declare and/or deliberately misclassify their goods to avoid paying their full share of duties.
When Amazon suspends an account or products, it makes internal notes regarding that seller's account. For better or worse, this information is not available to sellers.
For a price, sellers can obtain a copy of these internal annotation reports from Amazon employees who steal these reports. Often these reports can give insight into the blackhat strategies a seller is using that Amazon is aware of and those it is not aware of. This knowledge can help to recover a suspended account and also avoid a suspension down the road.
Incidentally, stealing of these internal reports resulted in at least one high-profile case of Amazon employees, consultants, and lawyers being arrested.
What Can Amazon Do?
Amazon is largely a victim of its own success. It has provided a platform for tens of thousands of entrepreneurs to make a lot of money off of. And with that surge of cash and opportunity comes the inevitable wave of ill-willed actors.
There are several actionable things that, in my opinion, Amazon could do to help eradicate many of the problems addressed in this article:
- Allow more frequent brand-gating for Brand Registered sellers who experience high rates of counterfeit sellers
- Give sellers more insight into search history and product performance to eliminate the black market for stolen reports. Amazon has instituted initiatives like Product Opportunity Explorer but this data is still limited.
- Do not allow listing contributions from anyone but the Brand Registered owners of products
- Continue to aggressively seek legal action (both through private lawsuits and working with local law enforcement) against sellers participating in illegal behavior.
- Better promote Amazon policies and laws to sellers in China through their already robust seller training programs/conferences
These are some steps that can be implemented relatively easily which would not only give non-Chinese sellers a more level playing field but also improve the customer experience.
It's important at this juncture to point out that gaming Amazon is not a tactic exclusive to Chinese sellers. Anyone who has sold on Amazon long enough knows that sellers employing questionable selling tactics bear all types of passports.
I've personally met many of them from nearly every continent in the world. As Zach Franklin emphasized, “Most [Chinese] sellers I know just want to build a real, defensible brand. They're hiring better designers and copywriters, building a real presence off of Amazon, and trying out influencer marketing, Adwords, and Facebook. They want to do things in the right way and they're working from 9 am – 9 pm, six days a week to do it”.
Amazon seemingly allows nearly any selling strategy to slide until a wave of negative press arrives that threatens its revenues. As one Chinese service provider described to me, “Amazon turns a blind eye to the leaking of competitor data from employees. It doesn't hurt them.” Amazon bills itself as the “Earth's Most Customer-Centric company” which often comes at the expense of sellers. However, seller interests and customers are also frequently aligned. Unscrupulous sellers employing fake reviews and selling counterfeit products help neither customers nor well-behaved sellers.
If you're a seller, have you been a victim of any of the strategies discussed here? If you're an Amazon customer, have you ever experienced fake reviews or counterfeit products? Share your experience in the comments section.