The Reason Behind the Mass Suspension of Chinese Amazon Sellers
There's been a mass suspension of Amazon sellers recently. But why does Amazon seem to be fixated on Chinese business owners?
Related Reading: How Chinese Sellers are Manipulating Amazon in 2021
Who Are These Sellers and Why Were They Suspended?
The majority of the suspended sellers are Chinese, and they were banned after using review manipulations that are strictly prohibited by Amazon. Over the years, Amazon has become smarter in detecting fake reviews, so these Chinese sellers tricked the system by using product inserts that offered gift cards in exchange for reviews.
Review manipulations on Amazon have become an industry on its own. SafetyDetectives uncovered 7 GB worth of data containing conversations of Amazon sellers and fake reviewers who provided their services in exchange for free products.
Suspensions because of review manipulation are not new, but people started paying more attention when even top sellers on the platform such as Aukey and Mpow, were included in the suspension. Before that, everybody thought that as long as you were raking in money for the company, Amazon would conveniently look past the issue.
Other popular brands that were suspended include TaoTronics, Vava, and RavPower, all manufactured by Chinese electronics manufacturer Sunvalley.
Related Reading: Top Amazon Sellers Marketplace List by Country and Location
Since then, thousands more have followed suit. The Global Times reported that at least 50,000 Chinese sellers have been blocked from Amazon since May 2021. SmartScout has a list of these suspended sellers, but we can’t guarantee that it’s complete. The suspended accounts specialize in different categories, from Books to Industrial & Scientific.
Aside from being suspended, their assets have also been frozen by the company, which is a nightmare for their legal team. Shenzhen Youkeshu Technology Co., a China-based cross-border ecommerce platform, said their frozen assets are worth at least $20 million.
Why Are Mass Suspensions Happening Now?
Amazon has been banning incentivized reviews since 2016, and sellers have been violating the rules since then. In fact, in 2019, it was reported that 61 percent of Amazon reviews are fake.
So why is the mass suspension just happening now? Is it because there’s a new CEO? Or is Amazon being pressured by someone else?
As much as we would like to applaud Amazon for banning sellers who use review manipulation, this move isn’t really coming from a genuine desire to eliminate fake reviews on the site—at least not directly.
The Biden administration has been very adamant on putting Big Tech under the microscope, and it has been reported that the Federal Trade Commission (FTC) pressured the company into banning sellers who violate the review policies. The FTC has sued Amazon sellers for fake reviews before, the first one being in 2019.
The increasing government pressure is evidenced not only by Senate hearings but also in the recent emails Amazon has been sending to sellers, asking for their support against a proposed law.
Other entities such as the United Kingdom's Competition and Markets Authority (CMA) also have their eyes on the Everything Store.
In other words, this so-called crackdown is a result of the overall pressure on Big Tech to keep its regulations.
A Difference in Culture
Here’s a question that you may think has a very obvious answer: Why are a lot of Chinese sellers on Amazon still using fake reviews despite its prohibition on the platform?
Sure, it helps increase sales. But there’s a less obvious reason behind it: It’s the norm in China.
It isn’t uncommon for Chinese merchants to include incentives to get positive reviews, and this difference in culture is what led to the mass suspension on Amazon. Because the platform hasn’t been too aggressive when it comes to suspension because of fake reviews in recent years, perhaps these sellers thought they could get away with it. They did for several years, so why worry?
But this just isn’t the norm in the West. And with more eyes on Big Tech, it’s harder to pull this off unnoticed.
Looking for Other Sales Channels Outside Amazon
Aside from trying to get their assets unfrozen, the suspended Chinese sellers are looking for other channels so they wouldn’t be as dependent on the platform. Luckily for them, their government has their back.
The Chinese government values cross-border ecommerce, and it has put in more policies in place to support the industry. And as a result of the recent suspensions, Shenzhen promised a 2 million yuan subsidy (about $309,000) to qualified sellers who were suspended by Amazon because of fake reviews.
To qualify for the subsidy, sellers must meet the following requirements:
- Started their operation before 2019
- Monthly average sales of at least $300,000
Each applicant must also submit no more than two independent online stores.
Possible sales channels these suspended sellers can look into are the following:
- Their own ecommerce websites
And with Walmart now accepting sellers outside the United States, it’s another possible platform to migrate into.
Of course, these sales channels are less popular compared to Amazon in terms of ecommerce in the West. And we won’t be expecting them to take over the throne anytime soon.
How Will These Suspensions Affect Other Amazon Sellers?
While the suspended sellers are looking for other sales channels and pleading for Amazon to unfreeze their assets, what happens to the rest of us?
Sellers Will Be More Cautious About Using Fake Reviews
Because Amazon has suspended even top sellers who are making the company a lot of money, we’re expecting business owners to be more careful about using fake reviews to bump their revenue. If you’re one of them, there are white hat tactics that you can look into now to avoid suspension.
Less Competition on Amazon
If any of the suspended Chinese sellers is one of your competitors, you probably jumped for joy when you heard the news. Chinese brands have some advantages over other sellers, and they’re hard to compete with.
“Made in China, Sold on Amazon” has gained popularity since China is the largest exporter in the world. In fact, even non-Chinese Amazon sellers rely on Chinese manufacturers for their products.
Expect More Suspensions
Unless the government stops its efforts, we’re expecting Amazon to suspend more sellers to prove they are doing their part in policing review manipulators on the platform. The focus will be on Chinese sellers for a while because as mentioned earlier, this prohibited practice is normal for them, making it logical to assume that they’re more likely to violate Amazon’s policies.
Related Reading: Another Mass Amazon Account Suspension Sweep Could Be Coming
However, we may soon see more non-Chinese Amazon sellers getting suspended for fake reviews as well.
We’re also expecting Amazon to step up not only against fake reviews but also against counterfeits. The company released its first Brand Protection Report in 2020, where they discussed their programs against counterfeits and the results of their efforts.
Rollup Companies Will Be More Careful With Chinese Sellers
Amazon rollups have been aggressively acquiring Amazon brands when ecommerce became stronger because of the pandemic. Some of them prefer Chinese businesses, but with these suspensions, they may become more cautious this time. They may even go for US brands more, ones they can be sure have not been involved in review manipulation.
Chinese sellers already make up more than half of all sellers on Amazon. But if they continue to manipulate reviews to the detriment of other sellers, they may be banned on the platform for good.
You don’t have to resort to black hat tactics like this to grow your brand. If you want to know how to get Amazon reviews without violating the policies, Mike and Dave have a great video for you.
After all these years, Amazon finally gave a direct punch on these toxic Chinese sellers. However, Amazon still does not use the silver bullet, shutting down all seller accounts using the same banking information. A company can have many sub-accounts by letting their employees register them using different IP addresses, but the card to receive the payment (and pay Amazon) is usually just one or two. (A bank account in western countries is not easy to open remotely, and it also brings risks/troubles to the company if their employees go rogue/leave.) If Amazon takes this move, almost all the fraud sellers on the platform will vanish, begging the Shenzhen government to support them. Amazon should also publicize the info of these brands and companies (instead of just banning them), and secretively share the account holder’s information with the CBP, so one day when these bosses entered the US/European countries (they often do, for exhibitions to copy other company’s designs), lawsuits will wait for them.
Completely agree, John. Maybe they need a little more pressure to do that.