Selling on Amazon: Behind the scenes

Selling on Amazon: Behind the scenes

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We are living in an era where we go to shopping malls just for entertainment and window shopping but usually end up buying most of our stuff online.

Why?

While relaxing at home, we can browse through a wide variety of products in one go, compare prices, get it easily shipped to our home and moreover, maybe try that for 30 days and if not satisfied, return it (thanks to the online business model and the cut-throat competition).

All this has made life so simpler for all of us as customers.

Image courtesy: wearesocial

As of 2018, around 3 billion people have smartphone devices with them and about 4.2 billion have an active internet connection.

That is a huge number for a world population of 7.7 billion people.

Clearly, there is a huge potential of online shopping and projections estimate the industry to touch around $5,000 billion in sales by the year 2021.

Image courtesy: www.statistica.com

But, what is happening behind the scenes?

Well, let’s get some insight before.

The idea was to talk about e-commerce platforms across the globe, but for simplicity, we shall consider only one target now, which is Amazon.

Amazon is not just a product listing and selling website. Amazon is a search engine. 

Image courtesy: www.wearegrowthhack.com

55% of product searches start on Amazon. One out of two people who are searching for a product, go to Amazon before they go anywhere else. And most product searches end there.

        Fact: About 40% of reviews we see on Amazon are unreliable

If you are a customer of Amazon, you must have seen that there are almost half a billion products per listing for each category. At the first page, most of the products look the same. The vast majority of the buyers click the products on the first page itself while most click on the top few only.

According to Amazon’s own data: 

  • 70% of Amazon customers never click past the first page of search results
  • 35% of Amazon shoppers click on the first product featured on a search page
  • The first 3 items displayed in search results account for 64% of clicks
  • 81% of clicks are on brands on the first page of search results

This clearly indicates that if you have a product on the top of the listing, you are guaranteed to make good sales and earn better profits.

So what makes a product appear on the top of the listing?

Amazon has a very strong algorithm called the A9 algorithm.

According to Search Engine Journal: A9 is Amazon’s organic product ranking algorithm that is composed of direct and indirect factors used to match users’ search queries to products they are most likely to purchase. Half of the battle of selling on Amazon is making sure your products get found.

The product listings on Amazon are based on certain parameters:

  • Images
  • Reviews
  • Written content
  • Seller reliability
  • Promotions
  • Advertising
  • Sales Velocity
Image courtesy: www.searchenginejournal.com

If you are a seller, having good scores in all these parameters indicates your product will have a spot in the first page of a catalogue listing. 

Simple, right?

You have control of what you sell and what you display on the website. Just be authentic and genuine and the customers will come to buy your product, be satisfied and give good reviews.

However, there is a catch.

There are thousands of other sellers who are trying to sell the exact same product as yours. They are thirsty for sales, profits, and the spot on the first page of the product listing.

So, to ensure their products are listed before you, they sometimes use unethical workarounds to get their desired outcomes.

These sellers use shadowing tactics or black hat strategies to beat their online rivals.

What are the black hat strategies sellers are applying to win the race?

  1. Take down the competition
  2. Fake reviews (Positive reviews)
  3. Fake sales (aka brushing)
  4. Bribes

Let us see what they are in detail:

1. Take down the competition

One of the most radical approaches is to kick down your competition using shadowing tactics.

Many genuine sellers claimed that they had zero sales during Black Friday / Cyber Monday / Christmas all because of such attacks on them.

Their main products were suspended from e-commerce websites like Amazon due to a lot of negative reviews. Most of these reviews come from an attack by their competitors who were trying to boost their own sales.

Reviews like:

  • “Cheap product”
  • “Not worth the money”
  • “Bad quality of materials used”
  • “Broke in the first minute of use itself”

filled the victim’s product listing and drove the customer traffic away from them.

As per Amazon, any product that is flagged as Dangerous or Fake can result in immediate suspension from the website.

Sometimes these devious competitors buy the products and return them, claiming they were not “as described”. Having multiple returns like this increases the victim’s Return Rate and thus increases the chances of Amazon suspending this product or maybe the seller itself.

When asked on how do they recover from these attacks, most of them claimed that they could not. It might take couple weeks or months to start afresh and may cost 10 to 100 thousand dollars in losses per year.

They easily get out of business in No Time.

Many of Amazon’s third-party sellers assert that most of the “just launched” merchants on Amazon Marketplace are peddling products that simply don’t exist, offering a low price to entice naive buyers.

2. Fake reviews (Positive reviews)

When a seller has a lot of positive reviews, their listing automatically goes up and they have a higher chance of hitting the bull’s eye of getting a spot on the first page of listing for a search term.

While doing a survey, it was noted a pair of earphones was listed in the first page and everything looked perfect about it. But the reviews were too good to be true.

Product: Wireless Bluetooth Headphones Earbuds with Microphone in Ear Headphones Noise Cancelling Earbuds with Mic Sweatproof Bluetooth Earphones Stereo Headset for Running Workout Gym Sports Secure Fit Case

868 customer reviews. 98% of them had a 5-star rating!

Some of the reviews were very interesting to read:

  • “Concepts are clearly explained. The steps are colour coded which allows the student to follow them easily. I highly recommend Book one and two”
  • “Such a unique and way to learn. Very smart!”
  • “They’re great socks. I hadn’t had socks that weren’t too tight in a long time. If anything, these are a bit too loose (I’m a 13). And they don’t shrink!”
  • “Awesome headphones! Will be buying a pair for my wife very soon!”
  • “Nice texture and good quality. The delivery was pretty fast. My friends loved it.”

I mean, these are headphones for god sake! What are you writing a review for?

Going a step further, I ran a Review Analysis for this product on a great tool available online, ReviewMeta:

Check out the depth of analysis they do on product reviews: https://reviewmeta.com/amazon/B075RWRP7R

        If you are an online shopper and look at customer reviews to make your decisions, please take out 2 mins of time to get an actual insight of the same by looking up the analysis on ReviewMeta.

How to identify a fake review?

Experts say if the review is relatively short, it usually indicates a fake review. Something like:

  • “Its awesome”
  • “My daughter loves it!”
  • “Wonderful product”

But Amazon is smart. It is a company that runs on algorithms and not people. It has detection systems that can analyse false claims and improper reviews.

Analysis of what the account suspensions for illicit behaviours today on Amazon looks like: 

Out of 77% of the total suspensions, 

  • 30% comes from inauthentic goods
  • 21% from safety complaints
  • 17% from trademark infringements
  • 9% from review abuse

As known, Amazon will ban sellers with such conditions, but many sellers in countries like China have multiple selling accounts. If one is taken down, they hot-swap to the second. If second goes down, they spin up a new one with absolute ease and never going out of the market.

Over the last couple of months, many unassuming products have been receiving dozens of five-star reviews within hours or days of being listed on the site, with some reviewers knocking them out at a furious rate.

        “The high ratings, of course, increase the visibility of those products, pushing them ahead of those from more honest vendors.”

Anonymous seller

It’s true that most reviews on Amazon are genuine – but that’s partly because most reviews predate 2016. Last year, the majority of new reviews posted on the site were flagged as suspect by ReviewMeta.

        “These reviews make up a tiny percentage of all reviews on Amazon, but even one is unacceptable, and we will not stop until all are identified and removed.”

Amazon

Along with their five-star ratings, fake reviews may sometimes tend to be longer than average and written like a product brochure, often incorporating pictures and video.

Image courtesy: www.inc.com, www.gettyimages.in
3. Fake sales (aka brushing)

As stated before, the more the seller sells, the higher the rankings.

Some professionals artificially boost sales and commission third parties to buy their products. Sometimes they even send out empty boxes to random addresses and claim genuine transactions.

There are third parties that make use of their buyer accounts to further increase brushing. They usually have access to large demography and access to customers overseas as well.

4. Bribes

During an investigation, it turned out that Amazon itself is examinig if some of their employees are illegally accepting payments in return of boosting their client rankings.

In a survey, it was found that sellers bribed amazon employees in China to:

  • Delete negative reviews from their products listings
  • Restore banned accounts
  • Retrieve restricted Amazon information to boost their sales

These bribes ranged somewhere from $80 to $2000.

Amazon claims to use sophisticated technologies like Machine Learning and Artificial intelligence to monitor these abnormal/suspicious activities on their website.

They say that the number of users trying to abuse the system is a tiny fraction of the website traffic.

Some of the sellers claim that these e-commerce websites are still vulnerable to different situations and in turn, genuine businessmen end up paying the price for it.

Some people don’t run black hat themselves, nor do they suggest doing it.

But today, this kind of knowledge is pretty much accessible to anyone who is willing to pay for it. The new trend in the industry is to sell expensive Black Hat Masterclasses, that as we have seen a few months ago were only available in China, exclusively to Chinese sellers, but today are being spread to potentially anyone who is ready to pay a lot of money for the courses.

        “It is more profitable today to sell reviews than to sell products on Amazon”

Anonymous seller

While investigating more on this topic, I came across an interesting personality named Howard Thai from China who claims himself as “Professor of Amazon”.

He has his own website http://www.professorofamazon.com/ where he provides professional help with Amazon Branding, Ranking, SEO and consulting.

Here is what people have written about him on his LinkedIn profile:

        “Howard is my professor in Amazon business, I am a new Amazon seller, doing the private label racing products, we are pretty good on building up product lineup and brands, with the good competence of products’ design and quality, after 1+ year operation on Amazon, the growth still below the expectation so much. Got the invitation from Howard, I joined the Hack The Planet Mastermind 8/14th-15th. It took me only 2 days there, the Hacks shown in the Mastermind really totally changed my idea regarding the Amazon seller’s operation skill. It gave me the amazing knowledge and idea how a professional Amazon seller can do to get good rank and sales and account safety, that’s exactly what I am looking for to get expected growth on Amazon business. It hard to image, without this new operational knowledge, an Amazon seller can achieve a best seller rank only rely on the products’ competence.”

Kevin Zhang
CEO of Huikaida Technology

        “Howard is well renowned in the Amazon world as “The Professor”. He knows the ins and outs of the Amazon platform and has helped countless sellers with his amazing hacks and insight. One of his big strengths is the inside track he has too many Chinese sellers where he can learn their strategies and share which help them dominate Amazon. In his recent “Hack the Planet” event he invited some multi-million dollar Chinese sellers to share their secrets. It was a real eye-opener for everyone who attended.”

Peter Chiang
General Manager of IMER Shanghai

So basically, he teaches and guides on how to sell more on e-commerce websites like Amazon for which he charges thousands of dollars. 

What a business!


Additional:

Amazon pays its sellers roughly every 14 days, and it doesn’t disburse money to sellers until they confirm that an order has been shipped. But crucially, sellers don’t have to prove the item was actually received. It’s not clear whether Amazon verifies the tracking numbers that sellers provide, but even if they do, a seller could pay for a shipping label and receive a valid tracking number without ever mailing a product.

There’s a lot of online seminars around Amazon today, not all of them are explicitly white hat. They use the same good old digital marketing funnel to create leads by giving easy & free content first, hoping to close the real deal over a decent conversion rate on a second meeting registration only – the price goes from $1000 to $5000 for a single live webinar.

If we take a look at the numbers with Franz Jordan, CEO at Sellics, we could still find a niche and hope that nobody will threaten it:

There is a trend in an economy of scales in this space (like in most other industries too). Already today, we have 20 thousand sellers that do more than $1 Million in revenue and 2 million sellers that do less than $100,000 in revenue, there is a massive long-tail. There will always be an opportunity for nicely differentiated niche players.

Conclusions:

Chinese in general are more aggressive in terms of bending or breaking Amazon rules than sellers in any other countries.  If they are kicked off of the platform, then they can easily reconfigure under the radar and start again. They have been trained to adapt to changes really quickly. Some Chinese companies believe that complete corporate restructuring in under 24 hours is completely normal.

Legitimate sellers are immensely frustrated by what they see as fraudulent competition – some even think it’s an attack on Amazon, perhaps Chinese corporate espionage. The direct financial impact on Amazon is hard to judge, let alone the damage to the website’s brand, but sellers’ outrage is very clear.

Whether this incredibly efficient competition coming from China might be fair or unfair, there are a lot of players out there who are definitely playing the Amazon game dirty.


References:

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4 Replies to “Selling on Amazon: Behind the scenes”

  1. Very well written Mohit, I am a seller on Amazon since more than 2 years now and can relate well to your words.

    1. Hi Rachita

      I am glad you liked the blog.
      Interesting to know that you are a seller too. I would love to get more insights into what difficulties you have faced being a part of it in the last 2 years.
      Please let me know if I can make any improvements in the same article or if I have missed out on any point.

    1. Hi Harshita

      I am glad you liked the blog.
      Even I felt the same that there is still too much to learn across all domains in the industry.

      Keep visiting the website every week for some interesting articles.

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