November 25, 2016 • 29 mins
(Bloomberg) -- Now that the holidays are approaching, chances are you'll be doing at least some of your gift shopping on Amazon.com. But before you click "buy" on the first favorably-reviewed item you find, take a minute to learn about how you can avoid getting duped by the site's fake reviews and phony products. This week, Bloomberg Technology's Brad Stone and Spencer Soper report on the extreme tactics some vendors are using to get an edge on the competition, and what Amazon is doing to crack down on those people who are gaming the system. As we do more of our shopping on the internet, the stakes are only getting higher.
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Speaker 1 (00:04):
It's that time of year again, Mistletoe, Santa Claus being
crosby on heavy rotation in the soaper household and the
holiday shopping season. And with every year that goes by,
it becomes more and more likely that you'll be spending
more of your hard earned dollars on a little site
called Amazon dot com. Yes, Alexa has been playing a
lot of being crosby in our household. And if you're
(00:26):
a vendor who sells on Amazon, this is an all
important time of year for your business. You're hoping for
a rush of Christmas sales and you'll be doing everything
you can to make sure that customers browsing on Amazon
can find your goods. And occasionally people go to really
really extreme lengths to try to get that edge over
all the other vendors competing for business. That's what our
(00:46):
story is about today, the rough and tumble vendor on
vendor hand to hand click to click combat going on
behind the scenes at Amazon Marketplace. Yeah, things like pumping
your customer reviews with five star ray eetings is a
way to game the algorithm and appear higher in the
list of search results when customers are looking for a
given product and counterfeiting popular items. That's something else that
(01:09):
happens all the time. We'll tell you about Amazon's never
ending quest to shut down this activity. It's like an
epic game of whack a mole, where just as Amazon
manages to crack down on one kind of bad behavior,
another practice springs up in its place. But first, let's
explain what exactly is Amazon Marketplace. Yeah, the name might
not sound familiar, but if you shopped on Amazon, chances
(01:32):
are you've already browsed products being sold on the marketplace.
Amazon operates like a traditional retailer such as Walmart or Target.
They buy things in bulk at wholesale prices and resell
them to shoppers. But it also operates like a consignment shop.
It lets more than two million merchants post their own
things on its site and give Amazon a cut of
each sale. That's the marketplace and is a major part
(01:54):
of Amazon's business. By letting third party merchants sell goods
on its marketplace, Amazon has been able to expand that's
inventory far more quickly than it would have been able
to if it operated only as a traditional retailer that
buys stocks and then sells its own merchandise. In an
annual letter to shareholders, CEO Jeff Bezos said that marketplace
sales account for nearly half of all units sold on Amazon. Yeah,
(02:17):
the marketplace is fifteen years old, but because of the
way all the search results in Amazon are listed, it's
not always clear which items are being sold by Amazon
and which are being sold by independent merchants. A lot
of our listeners probably buy from marketplace every week and
and may not even know they're doing it right, But
one of the best ways you can tell that a
given product is coming from the marketplaces by the customer reviews.
(02:39):
It's hard to overstate just how important these reviews are
for vendors, how much lots of great reviews helps them
boost sales, and how much negative reviews can really sink
a product. Reviews are the currency of Amazon. That's right.
Amazon really can't afford for shoppers to stop trusting the
authenticity of reviews. A recent report from the research from
feedwisor found that nine of Amazon shoppers wouldn't buy a
(03:03):
product at all if at a fewer than three stars.
So there's a lot of incentive to try to gain
the system, especially on Amazon, which drives so much more
commerce than other sites, and that's where all these underhanded
tactics really come into play. At stake are the billions
of dollars people spend on Amazon Marketplace every year, and
as we do more and more of our shopping on
the internet, the stakes are really only getting higher. I'm
(03:40):
Brad Stone and I'm Spencer Soper, and in this week's
episode of Decryptid, we'll hear from some of the people
who make Amazon Marketplace work. We'll hear from a vendor,
someone who has faced threats to his business because of copycats,
as well as one of Amazon's top reviewers to understand
just how influential those customer reviews can be. And we'll
off to the businesses trying to spot and stop customers
(04:03):
from getting duped by the fake reviews. Let's start by
taking a trip to South Carolina. Come in, all right,
so you're ready to talk Amazon reviews totally. It's my
(04:28):
favorite topic and you don't know what to do with me.
That's me arriving in Greenville, South Carolina to meet you
sell A Houseman. Just Sella is a top reviewer for Amazon,
and she's even written a book about it called Naked
Truths about getting Product reviews on Amazon dot com. Seven
insider tips to boost sales. One of the first things
(04:49):
to Sella explained to me is why these reviews matter
so much to merchants. A cool side effect of these
reviews is that sellers can get direct feedback on what
their customers like and don't like about their products. But
the real reason is landing a high ranking in Amazon
search results. Here's Gacella. This is a computer system that
works purely on algorithms. So the second you go and
(05:13):
buy any product, the sales ranking of this product is
going to improve. At the same time. You may designed
to review this product. Now it gets a review. And
here's why this is important. If a product has a
good sales rank and also a lot of reviews, Amazon's
(05:35):
s c O ranking pushes this product on its own.
Seeing her in her home in the Greenville suburbs, ge
Sella comes off like a college professor, passionate about her
subject matter and eager to share her knowledge. We chatted
over coffee while her cats lurked nearby, and Gescella told
me that she first got interested in Amazon reviews as
a book author because she knew they would be key
(05:57):
to her success. So she figured the best way to
learn about them was to begin writing them herself. Being
a top reviewer on Amazon has to be a pretty
odd business to be in. Just Selah told you she
gets two fifty emails a month from sellers hoping she'll
write a good review of their products. Yeah, she's become
quite a magnet. And because she gets pitches from so
many sellers, she also has some insight on the schemes
(06:20):
they come up with to help boost their ratings. Here's
one anecdote she had about how she was approached by
a Chinese seller. They said, hey, we're going to offer
you a couple you buy this product for ten percent
of the price, some of them for one percent of
the price, but you had to buy it was reduced ridiculously,
(06:41):
and then please review. If they went through the entire
is killed out top reviewers and they offered these some
digital device or Christmas lads in this time of the year,
they'd suddenly have a huge spike in which they sold
at one percent of the price, which Amazon ignores, sold
is sold regardless of how much yourself had. A huge
(07:04):
bag of a hundred and fifty product is coming in
over three days as a purchase oh, so this is
a key detail. Even if you buy something at a
steep discount, Amazon's algorithm does not care exactly. All Amazon
sees is that you paid for it. It doesn't matter
how much. Amazon is not a person. That algorithm says,
(07:27):
oh my god, this book is this product is in demand,
in demand, in demand, and it shows the same product
and all kinds of sites as if it were a
best seller. Other people see this product and they go,
oh my god, look at that product shoots up and
regiuss in the best seller category group area of vicinity.
(07:50):
And now you have the reviews coming in on top
of it. And that's when everybody else spies. And that's
why I think that Almason be the way with it,
because they realized what's happening. Okay, that last point is
really important. Last month, Amazon changed the rules for customer reviews.
(08:11):
Now Amazon gets to decide who's allowed to leave what
they call a quote incentivized review. That's right. Amazon is
something called the Vine program, and it's Amazon's way of
deciding which customers can receive promotional products and review them. So,
if I recall correctly, previously incentivized reviews were allowed, but
the reviewer had to disclose that they received the product
(08:32):
at a discount for their review. The problem was the
disclosures were becoming so prolific on the site, so ubiquitous,
it was actually tough to find that authentic review from
someone who just bought the product with no strings attached exactly.
And some consumers are actually getting frustrated by seeing all
of these disclosures about getting free products, and that undermine
this review system. That's so important because for customers sometimes
(08:55):
the hardest part about buying something online is not being
able to see it and touch it first. Consumer reviews
help eliminate that guesswork, but only if they're authentic. And
we should point out that reviews aren't just important to
Amazon and their companies like Yelp and trip advisor and
eBay and open table that rely on customer reviews to
drive traffic, and they also grapple with complaints about gamesmanship
(09:17):
and authentic reviews. Yeah, the gamesmanship has been relentless. And
get this, just weeks after Amazon made those changes, Gessella
told me sellers are already finding ways around it and
are trying to keep Amazon in the dark so I
can approach from a Chinese game up who writes to me,
(09:38):
please review this product. We will send you a gift card,
and then we pray that you don't tell. The phrase
we pray that you don't tell already implies that they
know they're doing the wrong thing. The same system is
happening as before. The band that gives me the product,
the gift card. I I'm buying the product, I'm driving
(10:02):
up the products rank, and then they want my review
and basically the same thing happened that before. Now we
put ourselves into Amazon's position. They probably know them. They
cannot say we're gonna stop selling gift cards, so that's
not gonna happen. Obviously they cannot. So what they do
(10:22):
is they come in break to Active and try to
find these reviews with the algorithm. And that's the only
thing that they can do. Now. Jo Selah wasn't the
only one to notice something fishy happening with Amazon's reviews.
(10:42):
So I took a trip to Brooklyn, New York. I
just do what I do. SEE have to do what
I think I can do what I think. I don't
know what I do. I just do without change. Before
we were all buying helps from Amazon around this time
last year, and we kept not noticing that it would
(11:06):
come really late, or it would come without Amazon packaging,
or it comes with stamps from foreign countries that we
didn't realize it was coming. So it looked really weird
and suspicious. That's MINGUI Minx companies called fake Spot. It's
a website that rates the authenticity of Amazon's product ratings
and reviews. Basically tells customers whether they can trust the ratings.
(11:29):
So an entire company dedicated to spotting fake ratings and reviews.
It gives you some sense of just how widespread the
issue is. If there's a cottage industry developing around online
customer reviews. Yeah, and the timing of it to fake
Spot only launched last year, but it's already getting millions
of users. It works by cutting and pasting the u
r L for an Amazon product into its search engine. Here,
(11:51):
let me show it to you. Okay, so you've got these.
You've got an Omega fish oil up on Amazon dot
com and it's got three two reviews, mostly positive. It
looks good. So how can fake spot help us? So here,
we're gonna cut and paste the u r L for
this product. Go over to fake spot, which looks like
your normal search engine. You're you're entering the r L
(12:12):
into a search bar and you click analyze Wow, an
F grade of failing grade, just like an F on
a term fail. The Omega fish oil with three two
reviews and four and half stars, that those were bogus. Yes,
So if you just counted on Amazon reviews alone as
a time strap shopper, you might see those reviews and
decided to buy the product. But if you take an
extra step over at fake spot, you might have second thoughts.
(12:35):
And I picked that Omega three fish oil because Ming
said that healthcare products and beauty products in particular are
susceptible to fake reviews. My wife is getting all these
recommendations from our friends and like usually buy this cream
or by that oil. And as we started reading and
(12:55):
poking through the reviews, we realize that we weren't looking
at reviews with with a more critical eye, and that
we were just randomly accepting that that five. You know,
this thing has one or two views and it has
four stars, it mustn't be good. So we just and
as you start digging in deeper, as when you realize, oh,
(13:17):
sometimes people leave a review, it says, oh, I just
got this product, will update my review, you know, once
I tried the product, but they will leave it four stars,
And like, well, you're leaving four stars from a product
we haven't try it. But I think being in tech,
you're probably trained to think about They started this in
every all each of us started to see patterns. For example,
(13:37):
you would see that everybody used the same language to
describe the product. So for example and beauty, almost every
review would say with things like oh my skin was
so soft and supple, or the reviews would all be
clustered around the same date and no of a suddenly
look like twenty people dropped the review on this on
one same day. It was like and these were like
(14:00):
to us early early telltale sigence where something is wrong
or that the reviewers would leave seemingly long uh reviews
of the product, but it would make no mention specifically
of what the product was. It would just say I
loved it, I use it every day, It's fantastic, O
(14:21):
I reckon highly recommend everybody use it, with like, well,
that looks like a review that I'll go right for anything.
So I found two things interesting here. First, both ming
and gessella feel like these phony reviews are a fairly
new thing, like in the last year or two. That's interesting.
I mean, we've had customer reviews on the internet now
for twenty years. The probably have been fake reviews all along.
(14:43):
It's just that the stakes are so high and the
levels of online commerce are so significant now that the
problem is getting more attention exactly, becoming more prominent and
and and not getting washed out. The second thing is
Ming says, this product market for his business exists because
consumers are conditioned to respond to and trust products with
a lot of positive reviews. It's probably similar to the
(15:05):
Pavlovian response that we experience when we see the word
sale right. We feel like we're getting a good deal,
even if the price may not be all that great.
I fall for it all the time. And fake Spot,
which has created a hundred and fifty million Amazon reviews
to date, makes money from ad sales, but only enough
to maintain its web servers. Min said he and his
partners have some seed money, and they're primarily focused on
(15:28):
the product right now, and they worry about monetizing the
concept later. But here's how this search algorithm actually works.
The engine does two things. When you click for an analysis.
It goes and logs every review that the product has.
So let's say the product has five reviews, for example,
it will look through all five hundred reviews and then
(15:49):
at the same time, while I was looking for through
the reviews, it will then also take the profile of
each reviewer at all their reviews and his into account.
If you have a lot of unverified purchases, which our
purchases made outside of Amazon, but you leave the review
on Amazon, that's a big telltale sign for us. If
(16:12):
you have the date cluster thing, and so we have
things that we put in place to to track aggressive marketing.
So if you have a lot of date clusters, if
you have a lot of reviewers, then because we go
through the history. So let's say you have one reviewer
that posted a product A, and then as we go
through a check their history, we noticed that they were
(16:33):
on products see this category product D the other category
will know that they were a professional reviewer. Part of
the problem here has to be that there's just so
much for the merchants to gain as as well as
the reviewers who probably are enjoying their their freebees. Exactly,
they go hand in hand. Me and I talked about
how much the lure of the freebee is driving all
of this. We checked out the profile of one reviewer
(16:56):
who was really cleaning up this guy and I won't
name the name. Look at this review is starting from here.
Here's another one on the twenty four. Here's not a
one of the twenty four. Here's a not a one
twenty four. Here's any one twenty four. Here's another one
on the twenty four. So they're reviewing Spatula, pizza cutter,
(17:19):
garden Staples, EO plugs, Essential Oils, and two days two
days ago, drinking straws two more days ago. So you
look at this and you already can even if I
don't know who the person is in real life, I
can make you and I can make it an informed
judgment that says, who has time to sit down and
(17:40):
write ten reviews on ten different kinds of products in
ten different categories, And then two days ago did the
same thing on a bike pump. Who's got room for
all this? And they're all five stars? Love it? Love it, guys,
love it. I don't care if they are real people.
The engine books at this, and the engine will say
(18:02):
something is wrong with Ultimately, though, is it ever going
to be possible to catch all the fake reviews? Is
fake spots algorithm or is Amazon search engine good enough
to capture all of them? When you're accompany as big
as Amazon, maybe it's like steering at large tanker. There's
(18:25):
only so much you could do. Fake reviews aren't Amazon's
only problem. The company is also fighting fake products from
entering the marketplace. And this is one of those persistent
issues that can be very difficult to really permanently put
an end to, but a can dent customer trust in Amazon,
(18:47):
and it's been in the press recently yet it has
Most notably, Apple filed the lawsuit last month against an
Amazon merchant that it alleges sold fake Apple products, some
of them in safe, and Bergen Stocks announced it would
off selling its footwear and Amazon in Now Amazon is
upping the anti Earlier this month, Amazon filed to lawsuits
(19:07):
against its own vendors for allegedly selling counterfeits on its site.
This problem isn't just unique to Amazon. In China, Ali
Baba has had a knockoff problem for years. eBay probably
has just a big of a problem, but it doesn't
get as much attention, and it's it's it's bad for customers,
frankly because it hurts the merchants who are trying to
sell authentic products on sites like Amazon. Yeah. To get
(19:29):
a better sense of that, I spoke to Brett Rosenswag,
who sells something called the Urban Shelf on Amazon. It's
a product he invented himself, a small plastic shelf that
connects to a bed and you can store your cell
phone while it keys and other items close at hand
while sleeping. See, I'll pull it up here. Oh I see,
so it so Yeah. Well, so they're trying to disrupt
(19:52):
the lucrative night table industry, I see, by just replacing
it with this little kind of cafeteria tray thing that
you'd stick into your bed. Yeah, and I think they're
they're geared more towards the you know, bachelor or the
college dorm student, that sort of thing where there might
not even be room for a night's stance. Okay, So
how's Brett doing with the Urban Shelf? He says, sales
of the Urban Shelf tend to spike in the summer
(20:15):
July and August, when students are getting ready for college,
and sales were growing, but then he noticed copycat products
selling on Amazon for much less than his Here's Brett
telling me about how he decided to buy one of
these counterfeits to see it for himself. He got it
shipped to his home. When the package arrived, it actually
came in a box and the box had our label
(20:38):
super imposed on the ex chair of the box. So
they actually gone the distance to construct their own Urban
Shelf box for the Urban Shelf send it over and
it was also rand wrapped in nice I mean it
looked very you know, very professional, aside from few spelling
mistakes on there. You know, imitation is a sin, serious
form of flattery. I was a little adder, but at
(21:00):
the same time I was like, oh, these these rats
just stole my design. I feel I feel cheated. I feel,
you know, like someone took my took kind of like
my baby in and and ran away with it. So now,
Brett said he checks Amazon every day for the Urban Shelf,
looking to see who's selling it. He keeps an eye
(21:22):
out for potential fakes. His biggest worries that the fakes
are inferior, so customers buying them who confused them with
the original will be displeased and his product will get
a bad reputation based on the knockle. Has he had
any success at all trying to keep these copycats off
off the web in general or Amazon in particular. Yeah,
in Amazon particularly, said he spotted counterfeits about five times
(21:42):
and that Amazon is generally quick to knock them down
after he reports them. They have an automated system, and
he said sometimes he's had to go through that system
and report the fakes multiple times, but generally Amazon is
quick to act. Well. At first, I was like, you
know what, this might go away, and me they just
have a few of them. Then after a month, I
I still saw that our sales started to dip a
little bit because people were buying this lower price shell.
(22:05):
So this got me concerned and we began to figure
out how to get them off of the listening so
I had. Eventually I ordered one as a test sample.
I received it in the mail, I took some pictures,
I sent it in to Amazon fraud department and ended
up getting that seller's listing removed. That's the only guaranteed
(22:27):
way that you can. You can make it happy. You
can call, you can, you know moan and the emails,
but they want to see physical evidence of an order,
which is a test by pictures of the fraudulent shell,
pictures of the legitimate product, and actual concrete proof so
that you're they're not just kicking off some seller by
word of mouth. Given all these headaches of selling on Amazon,
(22:50):
it's pretty incredible so many merchants stick to the site.
But it's also not that surprising. I mean, it speaks
to how huge Amazon's customer bases and how large the
commerce on the site is, and the fact that there's
really no other website in the Western world that comes
close to this kind of traffic. You can say that again,
Amazon attracts three hundred million shoppers and it's marketplace model.
(23:12):
That's pretty much anyone who wants to sell something get
access to that giant pool of people. And it is
pretty easy for sellers. I mean, it's much less capital intensive,
time intensive, resource intensive than say opening up a traditional
brick and mortar store or even launching your own website
from scratch and then having to go market the site
yourself on on search engines like Google exactly. And because
(23:33):
of all that traffic Amazon brings these sellers, the money
to be made as one of these third party vendors
can be sizeable. Amazon has said more than seventy thousand
marketplace entrepreneurs had annual sales exceeding one hundred thousand dollars.
And there is a whole equosystem of other companies growing
up around these sellers to support them, to help turn
their distribution through Amazon into sustainable business. Yeah. In any
(23:55):
given month, dozens of Amazon merchants can be found sitting
in hotel conference rooms in Las Vegas, Seattle, and Los
Angeles swapping ideas and listening to consultants discussed strategies. I
actually caught up with one such consultant, Eric Heller E
R I C H E L L E R and
your title with Marketplace Signition CEO and founder. Eric actually
(24:18):
used to work at Amazon, so he gives his clients
tips from the inside. At Amazon, Eric used to manage
the company's merchant strategies, but now he advises them independently
through his company called Marketplace Ignition. Even when I got there,
in that was well known even then, that idea of
the virtuous cycle at Amazon of adding selection, and by
(24:42):
adding selection, you add you add traffic because people want that,
and then you add scale and and you know, add
nose until you get to the next level, and you
sort of level up the site and you can lower
price and that will bring more people and start the
cycle over again. The marketplace was of the ways Amazon
was able to grow its product offering so fast. It
(25:04):
was really clear even early on that people were always
searching for items that we just couldn't stop fast enough.
You know, we started with just books, music and books
and books music video and the books music video DVD.
And as we started to just add in, you know,
let's try and consumer like tracks, let's try that. Thinks
it was amazing what the search terms would tell you
people still wanted and you couldn't grow that possibly fast enough.
(25:26):
What's interesting is that, in comparison with the early days
of the marketplace, he says he's now seeing online merchants
paying ever more attention to getting good product reviews. So
here's another person saying that's a new development. Here he
is again, we've seen a complete shift over the last
six to eighteen months where brands will come and we'll
say you've got to help us with Amazon and say, oh, okay,
(25:49):
are you having distribution challenges there? And they'd say, no,
you know, we're being until we need to be more
involved with Amazon because products have bad reviews. So there's
a stat that Amazon talks a lot about. You've seen,
and it's been around, probably in some form or fashion.
I can remember um since since I was there, but
I have seen it recently to that a dollar on
Amazon Translate send us more than seven dollars off Amazon
(26:13):
in terms of influence sales. But you know, the good
the good reviews on Amazon help you elsewhere. I also
asked Eric about preventing fake reviews, something we already heard
Ming and Jocela talking about earlier. Can Amazon ever get
full control over this? This is always going to be
bleeding edge and they're gonna be people pushing the edges
(26:34):
of this system. If you said, do I think that
at scale this is going to UM, this is going
to influence UM Amazon to a point where we should
all be concerned. I think Amazon has tamped down on
the biggest component, and I think there will be some
of this happening at the peripheral UM. I do think
it will be harder for someone to get to scale
(26:56):
using a system. We're getting a gift card. It's just
hard to get a thousand great reviews that way, you know,
I still think, for example, that there's probably gonna be
review clubs going on. It'll be hard to track. I
think what you're talking about with gift cards still going
to be hard to track. And I think further the
idea that you won't be able to really advertise that
you're doing that without risking getting a lawsuit from Amazon.
(27:17):
I think we'll will help tamp down some of it
as well, but I think it will probably continue to
exist and it will be a cat and mouse game.
So what do you think, Brad, You're gonna take an
extra critical look at those reviews this year when you
shot for the Twins on Amazon? Or do you think
you'll be cutting and pasting U r L s into
(27:38):
fake Spot? Well? Fake spot is a great tool, and
I'm appreciative that you pointed it out to US Spencer,
but I think it's unlikely that Amazon's hundreds of millions
of customers will will go to another site to bet reviews.
I mean, I think you know, one of the reasons
why people do flock to Amazon is because it's simple,
it's easy to use it, have their payment info stored,
it's one stop shopping, and they never have to leave
(27:58):
their house. So you know, ultimate the Amazon has to
keep pursuing these bad actors who exploit its platform, and
we've seen them make some aggressive changes and big changes
to the platform. But do you think that they're ever
going to be able to fully contain this problem? Maybe not.
I mean it's like everything on the internet. You know, spam,
you know, misinformation. It's a cat and mouse game and
you know, and this is sad to say, but I
(28:19):
think that consumers have to get a little smarter about
online reviews. I mean we can no longer take them
as genuine expressions from other customers. I mean, they are
what they are, and some reviews might not be authentic. Uh,
some might be gamed, and it might be, in effect,
just another form of marketing. And that's it for this
(28:44):
week's episode of decryptod. Thanks for listening, and tell us
have you ever had an experience with fake reviews or
products on Amazon? You can write to me on Twitter.
I'm at brad Stone and I'm at Spencer Soper. And
if you're not a Twitter user, you can also write
to our producer or Pio or even better, record a
voice memo and send it to her at p G
(29:05):
A D K A R. I at Bloomberg dot net.
If you haven't already subscribed to our show on iTunes
or wherever you get your podcasts, and while you're there,
please take a moment to leave us an authentic rating
and review. It really helps. This episode was produced by
Pia Gutkari aki Eto, Liz Smith and Magnus Hendrickson, and
(29:27):
Emily Buso edited Spencer Soper's accompanying print story on the
Amazon Marketplace, which you can check out at Bloomberg dot com.
Slash Technology Alec McCabe as head of Bloomberg Podcasts. We'll
see you next week.
It's that time of year again, Mistletoe, Santa Claus being
crosby on heavy rotation in the soaper household and the
holiday shopping season. And with every year that goes by,
it becomes more and more likely that you'll be spending
more of your hard earned dollars on a little site
called Amazon dot com. Yes, Alexa has been playing a
lot of being crosby in our household. And if you're
(00:26):
a vendor who sells on Amazon, this is an all
important time of year for your business. You're hoping for
a rush of Christmas sales and you'll be doing everything
you can to make sure that customers browsing on Amazon
can find your goods. And occasionally people go to really
really extreme lengths to try to get that edge over
all the other vendors competing for business. That's what our
(00:46):
story is about today, the rough and tumble vendor on
vendor hand to hand click to click combat going on
behind the scenes at Amazon Marketplace. Yeah, things like pumping
your customer reviews with five star ray eetings is a
way to game the algorithm and appear higher in the
list of search results when customers are looking for a
given product and counterfeiting popular items. That's something else that
(01:09):
happens all the time. We'll tell you about Amazon's never
ending quest to shut down this activity. It's like an
epic game of whack a mole, where just as Amazon
manages to crack down on one kind of bad behavior,
another practice springs up in its place. But first, let's
explain what exactly is Amazon Marketplace. Yeah, the name might
not sound familiar, but if you shopped on Amazon, chances
(01:32):
are you've already browsed products being sold on the marketplace.
Amazon operates like a traditional retailer such as Walmart or Target.
They buy things in bulk at wholesale prices and resell
them to shoppers. But it also operates like a consignment shop.
It lets more than two million merchants post their own
things on its site and give Amazon a cut of
each sale. That's the marketplace and is a major part
(01:54):
of Amazon's business. By letting third party merchants sell goods
on its marketplace, Amazon has been able to expand that's
inventory far more quickly than it would have been able
to if it operated only as a traditional retailer that
buys stocks and then sells its own merchandise. In an
annual letter to shareholders, CEO Jeff Bezos said that marketplace
sales account for nearly half of all units sold on Amazon. Yeah,
(02:17):
the marketplace is fifteen years old, but because of the
way all the search results in Amazon are listed, it's
not always clear which items are being sold by Amazon
and which are being sold by independent merchants. A lot
of our listeners probably buy from marketplace every week and
and may not even know they're doing it right, But
one of the best ways you can tell that a
given product is coming from the marketplaces by the customer reviews.
(02:39):
It's hard to overstate just how important these reviews are
for vendors, how much lots of great reviews helps them
boost sales, and how much negative reviews can really sink
a product. Reviews are the currency of Amazon. That's right.
Amazon really can't afford for shoppers to stop trusting the
authenticity of reviews. A recent report from the research from
feedwisor found that nine of Amazon shoppers wouldn't buy a
(03:03):
product at all if at a fewer than three stars.
So there's a lot of incentive to try to gain
the system, especially on Amazon, which drives so much more
commerce than other sites, and that's where all these underhanded
tactics really come into play. At stake are the billions
of dollars people spend on Amazon Marketplace every year, and
as we do more and more of our shopping on
the internet, the stakes are really only getting higher. I'm
(03:40):
Brad Stone and I'm Spencer Soper, and in this week's
episode of Decryptid, we'll hear from some of the people
who make Amazon Marketplace work. We'll hear from a vendor,
someone who has faced threats to his business because of copycats,
as well as one of Amazon's top reviewers to understand
just how influential those customer reviews can be. And we'll
off to the businesses trying to spot and stop customers
(04:03):
from getting duped by the fake reviews. Let's start by
taking a trip to South Carolina. Come in, all right,
so you're ready to talk Amazon reviews totally. It's my
(04:28):
favorite topic and you don't know what to do with me.
That's me arriving in Greenville, South Carolina to meet you
sell A Houseman. Just Sella is a top reviewer for Amazon,
and she's even written a book about it called Naked
Truths about getting Product reviews on Amazon dot com. Seven
insider tips to boost sales. One of the first things
(04:49):
to Sella explained to me is why these reviews matter
so much to merchants. A cool side effect of these
reviews is that sellers can get direct feedback on what
their customers like and don't like about their products. But
the real reason is landing a high ranking in Amazon
search results. Here's Gacella. This is a computer system that
works purely on algorithms. So the second you go and
(05:13):
buy any product, the sales ranking of this product is
going to improve. At the same time. You may designed
to review this product. Now it gets a review. And
here's why this is important. If a product has a
good sales rank and also a lot of reviews, Amazon's
(05:35):
s c O ranking pushes this product on its own.
Seeing her in her home in the Greenville suburbs, ge
Sella comes off like a college professor, passionate about her
subject matter and eager to share her knowledge. We chatted
over coffee while her cats lurked nearby, and Gescella told
me that she first got interested in Amazon reviews as
a book author because she knew they would be key
(05:57):
to her success. So she figured the best way to
learn about them was to begin writing them herself. Being
a top reviewer on Amazon has to be a pretty
odd business to be in. Just Selah told you she
gets two fifty emails a month from sellers hoping she'll
write a good review of their products. Yeah, she's become
quite a magnet. And because she gets pitches from so
many sellers, she also has some insight on the schemes
(06:20):
they come up with to help boost their ratings. Here's
one anecdote she had about how she was approached by
a Chinese seller. They said, hey, we're going to offer
you a couple you buy this product for ten percent
of the price, some of them for one percent of
the price, but you had to buy it was reduced ridiculously,
(06:41):
and then please review. If they went through the entire
is killed out top reviewers and they offered these some
digital device or Christmas lads in this time of the year,
they'd suddenly have a huge spike in which they sold
at one percent of the price, which Amazon ignores, sold
is sold regardless of how much yourself had. A huge
(07:04):
bag of a hundred and fifty product is coming in
over three days as a purchase oh, so this is
a key detail. Even if you buy something at a
steep discount, Amazon's algorithm does not care exactly. All Amazon
sees is that you paid for it. It doesn't matter
how much. Amazon is not a person. That algorithm says,
(07:27):
oh my god, this book is this product is in demand,
in demand, in demand, and it shows the same product
and all kinds of sites as if it were a
best seller. Other people see this product and they go,
oh my god, look at that product shoots up and
regiuss in the best seller category group area of vicinity.
(07:50):
And now you have the reviews coming in on top
of it. And that's when everybody else spies. And that's
why I think that Almason be the way with it,
because they realized what's happening. Okay, that last point is
really important. Last month, Amazon changed the rules for customer reviews.
(08:11):
Now Amazon gets to decide who's allowed to leave what
they call a quote incentivized review. That's right. Amazon is
something called the Vine program, and it's Amazon's way of
deciding which customers can receive promotional products and review them. So,
if I recall correctly, previously incentivized reviews were allowed, but
the reviewer had to disclose that they received the product
(08:32):
at a discount for their review. The problem was the
disclosures were becoming so prolific on the site, so ubiquitous,
it was actually tough to find that authentic review from
someone who just bought the product with no strings attached exactly.
And some consumers are actually getting frustrated by seeing all
of these disclosures about getting free products, and that undermine
this review system. That's so important because for customers sometimes
(08:55):
the hardest part about buying something online is not being
able to see it and touch it first. Consumer reviews
help eliminate that guesswork, but only if they're authentic. And
we should point out that reviews aren't just important to
Amazon and their companies like Yelp and trip advisor and
eBay and open table that rely on customer reviews to
drive traffic, and they also grapple with complaints about gamesmanship
(09:17):
and authentic reviews. Yeah, the gamesmanship has been relentless. And
get this, just weeks after Amazon made those changes, Gessella
told me sellers are already finding ways around it and
are trying to keep Amazon in the dark so I
can approach from a Chinese game up who writes to me,
(09:38):
please review this product. We will send you a gift card,
and then we pray that you don't tell. The phrase
we pray that you don't tell already implies that they
know they're doing the wrong thing. The same system is
happening as before. The band that gives me the product,
the gift card. I I'm buying the product, I'm driving
(10:02):
up the products rank, and then they want my review
and basically the same thing happened that before. Now we
put ourselves into Amazon's position. They probably know them. They
cannot say we're gonna stop selling gift cards, so that's
not gonna happen. Obviously they cannot. So what they do
(10:22):
is they come in break to Active and try to
find these reviews with the algorithm. And that's the only
thing that they can do. Now. Jo Selah wasn't the
only one to notice something fishy happening with Amazon's reviews.
(10:42):
So I took a trip to Brooklyn, New York. I
just do what I do. SEE have to do what
I think I can do what I think. I don't
know what I do. I just do without change. Before
we were all buying helps from Amazon around this time
last year, and we kept not noticing that it would
(11:06):
come really late, or it would come without Amazon packaging,
or it comes with stamps from foreign countries that we
didn't realize it was coming. So it looked really weird
and suspicious. That's MINGUI Minx companies called fake Spot. It's
a website that rates the authenticity of Amazon's product ratings
and reviews. Basically tells customers whether they can trust the ratings.
(11:29):
So an entire company dedicated to spotting fake ratings and reviews.
It gives you some sense of just how widespread the
issue is. If there's a cottage industry developing around online
customer reviews. Yeah, and the timing of it to fake
Spot only launched last year, but it's already getting millions
of users. It works by cutting and pasting the u
r L for an Amazon product into its search engine. Here,
(11:51):
let me show it to you. Okay, so you've got these.
You've got an Omega fish oil up on Amazon dot
com and it's got three two reviews, mostly positive. It
looks good. So how can fake spot help us? So here,
we're gonna cut and paste the u r L for
this product. Go over to fake spot, which looks like
your normal search engine. You're you're entering the r L
(12:12):
into a search bar and you click analyze Wow, an
F grade of failing grade, just like an F on
a term fail. The Omega fish oil with three two
reviews and four and half stars, that those were bogus. Yes,
So if you just counted on Amazon reviews alone as
a time strap shopper, you might see those reviews and
decided to buy the product. But if you take an
extra step over at fake spot, you might have second thoughts.
(12:35):
And I picked that Omega three fish oil because Ming
said that healthcare products and beauty products in particular are
susceptible to fake reviews. My wife is getting all these
recommendations from our friends and like usually buy this cream
or by that oil. And as we started reading and
(12:55):
poking through the reviews, we realize that we weren't looking
at reviews with with a more critical eye, and that
we were just randomly accepting that that five. You know,
this thing has one or two views and it has
four stars, it mustn't be good. So we just and
as you start digging in deeper, as when you realize, oh,
(13:17):
sometimes people leave a review, it says, oh, I just
got this product, will update my review, you know, once
I tried the product, but they will leave it four stars,
And like, well, you're leaving four stars from a product
we haven't try it. But I think being in tech,
you're probably trained to think about They started this in
every all each of us started to see patterns. For example,
(13:37):
you would see that everybody used the same language to
describe the product. So for example and beauty, almost every
review would say with things like oh my skin was
so soft and supple, or the reviews would all be
clustered around the same date and no of a suddenly
look like twenty people dropped the review on this on
one same day. It was like and these were like
(14:00):
to us early early telltale sigence where something is wrong
or that the reviewers would leave seemingly long uh reviews
of the product, but it would make no mention specifically
of what the product was. It would just say I
loved it, I use it every day, It's fantastic, O
(14:21):
I reckon highly recommend everybody use it, with like, well,
that looks like a review that I'll go right for anything.
So I found two things interesting here. First, both ming
and gessella feel like these phony reviews are a fairly
new thing, like in the last year or two. That's interesting.
I mean, we've had customer reviews on the internet now
for twenty years. The probably have been fake reviews all along.
(14:43):
It's just that the stakes are so high and the
levels of online commerce are so significant now that the
problem is getting more attention exactly, becoming more prominent and
and and not getting washed out. The second thing is
Ming says, this product market for his business exists because
consumers are conditioned to respond to and trust products with
a lot of positive reviews. It's probably similar to the
(15:05):
Pavlovian response that we experience when we see the word
sale right. We feel like we're getting a good deal,
even if the price may not be all that great.
I fall for it all the time. And fake Spot,
which has created a hundred and fifty million Amazon reviews
to date, makes money from ad sales, but only enough
to maintain its web servers. Min said he and his
partners have some seed money, and they're primarily focused on
(15:28):
the product right now, and they worry about monetizing the
concept later. But here's how this search algorithm actually works.
The engine does two things. When you click for an analysis.
It goes and logs every review that the product has.
So let's say the product has five reviews, for example,
it will look through all five hundred reviews and then
(15:49):
at the same time, while I was looking for through
the reviews, it will then also take the profile of
each reviewer at all their reviews and his into account.
If you have a lot of unverified purchases, which our
purchases made outside of Amazon, but you leave the review
on Amazon, that's a big telltale sign for us. If
(16:12):
you have the date cluster thing, and so we have
things that we put in place to to track aggressive marketing.
So if you have a lot of date clusters, if
you have a lot of reviewers, then because we go
through the history. So let's say you have one reviewer
that posted a product A, and then as we go
through a check their history, we noticed that they were
(16:33):
on products see this category product D the other category
will know that they were a professional reviewer. Part of
the problem here has to be that there's just so
much for the merchants to gain as as well as
the reviewers who probably are enjoying their their freebees. Exactly,
they go hand in hand. Me and I talked about
how much the lure of the freebee is driving all
of this. We checked out the profile of one reviewer
(16:56):
who was really cleaning up this guy and I won't
name the name. Look at this review is starting from here.
Here's another one on the twenty four. Here's not a
one of the twenty four. Here's a not a one
twenty four. Here's any one twenty four. Here's another one
on the twenty four. So they're reviewing Spatula, pizza cutter,
(17:19):
garden Staples, EO plugs, Essential Oils, and two days two
days ago, drinking straws two more days ago. So you
look at this and you already can even if I
don't know who the person is in real life, I
can make you and I can make it an informed
judgment that says, who has time to sit down and
(17:40):
write ten reviews on ten different kinds of products in
ten different categories, And then two days ago did the
same thing on a bike pump. Who's got room for
all this? And they're all five stars? Love it? Love it, guys,
love it. I don't care if they are real people.
The engine books at this, and the engine will say
(18:02):
something is wrong with Ultimately, though, is it ever going
to be possible to catch all the fake reviews? Is
fake spots algorithm or is Amazon search engine good enough
to capture all of them? When you're accompany as big
as Amazon, maybe it's like steering at large tanker. There's
(18:25):
only so much you could do. Fake reviews aren't Amazon's
only problem. The company is also fighting fake products from
entering the marketplace. And this is one of those persistent
issues that can be very difficult to really permanently put
an end to, but a can dent customer trust in Amazon,
(18:47):
and it's been in the press recently yet it has
Most notably, Apple filed the lawsuit last month against an
Amazon merchant that it alleges sold fake Apple products, some
of them in safe, and Bergen Stocks announced it would
off selling its footwear and Amazon in Now Amazon is
upping the anti Earlier this month, Amazon filed to lawsuits
(19:07):
against its own vendors for allegedly selling counterfeits on its site.
This problem isn't just unique to Amazon. In China, Ali
Baba has had a knockoff problem for years. eBay probably
has just a big of a problem, but it doesn't
get as much attention, and it's it's it's bad for customers,
frankly because it hurts the merchants who are trying to
sell authentic products on sites like Amazon. Yeah. To get
(19:29):
a better sense of that, I spoke to Brett Rosenswag,
who sells something called the Urban Shelf on Amazon. It's
a product he invented himself, a small plastic shelf that
connects to a bed and you can store your cell
phone while it keys and other items close at hand
while sleeping. See, I'll pull it up here. Oh I see,
so it so Yeah. Well, so they're trying to disrupt
(19:52):
the lucrative night table industry, I see, by just replacing
it with this little kind of cafeteria tray thing that
you'd stick into your bed. Yeah, and I think they're
they're geared more towards the you know, bachelor or the
college dorm student, that sort of thing where there might
not even be room for a night's stance. Okay, So
how's Brett doing with the Urban Shelf? He says, sales
of the Urban Shelf tend to spike in the summer
(20:15):
July and August, when students are getting ready for college,
and sales were growing, but then he noticed copycat products
selling on Amazon for much less than his Here's Brett
telling me about how he decided to buy one of
these counterfeits to see it for himself. He got it
shipped to his home. When the package arrived, it actually
came in a box and the box had our label
(20:38):
super imposed on the ex chair of the box. So
they actually gone the distance to construct their own Urban
Shelf box for the Urban Shelf send it over and
it was also rand wrapped in nice I mean it
looked very you know, very professional, aside from few spelling
mistakes on there. You know, imitation is a sin, serious
form of flattery. I was a little adder, but at
(21:00):
the same time I was like, oh, these these rats
just stole my design. I feel I feel cheated. I feel,
you know, like someone took my took kind of like
my baby in and and ran away with it. So now,
Brett said he checks Amazon every day for the Urban Shelf,
looking to see who's selling it. He keeps an eye
(21:22):
out for potential fakes. His biggest worries that the fakes
are inferior, so customers buying them who confused them with
the original will be displeased and his product will get
a bad reputation based on the knockle. Has he had
any success at all trying to keep these copycats off
off the web in general or Amazon in particular. Yeah,
in Amazon particularly, said he spotted counterfeits about five times
(21:42):
and that Amazon is generally quick to knock them down
after he reports them. They have an automated system, and
he said sometimes he's had to go through that system
and report the fakes multiple times, but generally Amazon is
quick to act. Well. At first, I was like, you
know what, this might go away, and me they just
have a few of them. Then after a month, I
I still saw that our sales started to dip a
little bit because people were buying this lower price shell.
(22:05):
So this got me concerned and we began to figure
out how to get them off of the listening so
I had. Eventually I ordered one as a test sample.
I received it in the mail, I took some pictures,
I sent it in to Amazon fraud department and ended
up getting that seller's listing removed. That's the only guaranteed
(22:27):
way that you can. You can make it happy. You
can call, you can, you know moan and the emails,
but they want to see physical evidence of an order,
which is a test by pictures of the fraudulent shell,
pictures of the legitimate product, and actual concrete proof so
that you're they're not just kicking off some seller by
word of mouth. Given all these headaches of selling on Amazon,
(22:50):
it's pretty incredible so many merchants stick to the site.
But it's also not that surprising. I mean, it speaks
to how huge Amazon's customer bases and how large the
commerce on the site is, and the fact that there's
really no other website in the Western world that comes
close to this kind of traffic. You can say that again,
Amazon attracts three hundred million shoppers and it's marketplace model.
(23:12):
That's pretty much anyone who wants to sell something get
access to that giant pool of people. And it is
pretty easy for sellers. I mean, it's much less capital intensive,
time intensive, resource intensive than say opening up a traditional
brick and mortar store or even launching your own website
from scratch and then having to go market the site
yourself on on search engines like Google exactly. And because
(23:33):
of all that traffic Amazon brings these sellers, the money
to be made as one of these third party vendors
can be sizeable. Amazon has said more than seventy thousand
marketplace entrepreneurs had annual sales exceeding one hundred thousand dollars.
And there is a whole equosystem of other companies growing
up around these sellers to support them, to help turn
their distribution through Amazon into sustainable business. Yeah. In any
(23:55):
given month, dozens of Amazon merchants can be found sitting
in hotel conference rooms in Las Vegas, Seattle, and Los
Angeles swapping ideas and listening to consultants discussed strategies. I
actually caught up with one such consultant, Eric Heller E
R I C H E L L E R and
your title with Marketplace Signition CEO and founder. Eric actually
(24:18):
used to work at Amazon, so he gives his clients
tips from the inside. At Amazon, Eric used to manage
the company's merchant strategies, but now he advises them independently
through his company called Marketplace Ignition. Even when I got there,
in that was well known even then, that idea of
the virtuous cycle at Amazon of adding selection, and by
(24:42):
adding selection, you add you add traffic because people want that,
and then you add scale and and you know, add
nose until you get to the next level, and you
sort of level up the site and you can lower
price and that will bring more people and start the
cycle over again. The marketplace was of the ways Amazon
was able to grow its product offering so fast. It
(25:04):
was really clear even early on that people were always
searching for items that we just couldn't stop fast enough.
You know, we started with just books, music and books
and books music video and the books music video DVD.
And as we started to just add in, you know,
let's try and consumer like tracks, let's try that. Thinks
it was amazing what the search terms would tell you
people still wanted and you couldn't grow that possibly fast enough.
(25:26):
What's interesting is that, in comparison with the early days
of the marketplace, he says he's now seeing online merchants
paying ever more attention to getting good product reviews. So
here's another person saying that's a new development. Here he
is again, we've seen a complete shift over the last
six to eighteen months where brands will come and we'll
say you've got to help us with Amazon and say, oh, okay,
(25:49):
are you having distribution challenges there? And they'd say, no,
you know, we're being until we need to be more
involved with Amazon because products have bad reviews. So there's
a stat that Amazon talks a lot about. You've seen,
and it's been around, probably in some form or fashion.
I can remember um since since I was there, but
I have seen it recently to that a dollar on
Amazon Translate send us more than seven dollars off Amazon
(26:13):
in terms of influence sales. But you know, the good
the good reviews on Amazon help you elsewhere. I also
asked Eric about preventing fake reviews, something we already heard
Ming and Jocela talking about earlier. Can Amazon ever get
full control over this? This is always going to be
bleeding edge and they're gonna be people pushing the edges
(26:34):
of this system. If you said, do I think that
at scale this is going to UM, this is going
to influence UM Amazon to a point where we should
all be concerned. I think Amazon has tamped down on
the biggest component, and I think there will be some
of this happening at the peripheral UM. I do think
it will be harder for someone to get to scale
(26:56):
using a system. We're getting a gift card. It's just
hard to get a thousand great reviews that way, you know,
I still think, for example, that there's probably gonna be
review clubs going on. It'll be hard to track. I
think what you're talking about with gift cards still going
to be hard to track. And I think further the
idea that you won't be able to really advertise that
you're doing that without risking getting a lawsuit from Amazon.
(27:17):
I think we'll will help tamp down some of it
as well, but I think it will probably continue to
exist and it will be a cat and mouse game.
So what do you think, Brad, You're gonna take an
extra critical look at those reviews this year when you
shot for the Twins on Amazon? Or do you think
you'll be cutting and pasting U r L s into
(27:38):
fake Spot? Well? Fake spot is a great tool, and
I'm appreciative that you pointed it out to US Spencer,
but I think it's unlikely that Amazon's hundreds of millions
of customers will will go to another site to bet reviews.
I mean, I think you know, one of the reasons
why people do flock to Amazon is because it's simple,
it's easy to use it, have their payment info stored,
it's one stop shopping, and they never have to leave
(27:58):
their house. So you know, ultimate the Amazon has to
keep pursuing these bad actors who exploit its platform, and
we've seen them make some aggressive changes and big changes
to the platform. But do you think that they're ever
going to be able to fully contain this problem? Maybe not.
I mean it's like everything on the internet. You know, spam,
you know, misinformation. It's a cat and mouse game and
you know, and this is sad to say, but I
(28:19):
think that consumers have to get a little smarter about
online reviews. I mean we can no longer take them
as genuine expressions from other customers. I mean, they are
what they are, and some reviews might not be authentic. Uh,
some might be gamed, and it might be, in effect,
just another form of marketing. And that's it for this
(28:44):
week's episode of decryptod. Thanks for listening, and tell us
have you ever had an experience with fake reviews or
products on Amazon? You can write to me on Twitter.
I'm at brad Stone and I'm at Spencer Soper. And
if you're not a Twitter user, you can also write
to our producer or Pio or even better, record a
voice memo and send it to her at p G
(29:05):
A D K A R. I at Bloomberg dot net.
If you haven't already subscribed to our show on iTunes
or wherever you get your podcasts, and while you're there,
please take a moment to leave us an authentic rating
and review. It really helps. This episode was produced by
Pia Gutkari aki Eto, Liz Smith and Magnus Hendrickson, and
(29:27):
Emily Buso edited Spencer Soper's accompanying print story on the
Amazon Marketplace, which you can check out at Bloomberg dot com.
Slash Technology Alec McCabe as head of Bloomberg Podcasts. We'll
see you next week.
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