Since the end of April, the wave of Amazon’s blockade of Chinese sellers shocked China’s cross-border e-commerce. On September 17, Amazon responded for the first time, saying that in the past five months, about 600 Chinese brand sales license rights and about 3,000 seller accounts were blocked.
Amazon’s reasoning is that these accounts have repeatedly abused comments, and they continue to violate the rules after warning, and there is little chance of appealing to dissolve the partnership brand. Chinese cross-border e-commerce companies moved the cheating practices of domestic sales platforms to Amazon. The Ministry of Commerce of China called them “growth troubles.” However, a large number of netizens applauded the punishment of e-commerce companies, hoping to purify the unfair competition environment.
Amazon’s Chinese e-commerce company was banned by a big stick
Starting from the end of April this year, the wave of Amazon’s blockade of Chinese sellers shocked China’s cross-border e-commerce. The ban has continued to this day, and a large number of Chinese sellers have been affected. Leading merchants such as Pazhsun, Aoji, Xinghui and Youkeshu were the first to bear the brunt, and a large number of Amazon products were removed from the shelves.
Shenzhen, as the hinterland of cross-border e-commerce, is particularly painful. Shenzhen has gathered many Amazon e-commerce companies with annual sales ranging from one billion to several billion yuan. There are even “Four Young People in South China”, “Five Tigers of Bantian”, and “Three Outstanding Amazons”.
According to statistics from the Shenzhen Cross-Border E-Commerce Association, from May to August, more than 50,000 Chinese sellers on Amazon were blocked, causing an estimated industry loss of 100 billion yuan. Last year, Yishu, which sold 1.5 billion yuan on Amazon, announced in early July that “340 of its Amazon stores have been closed, and about 130 million yuan has been frozen.” Industry insiders estimate that 200,000 to 300,000 sellers will be included in the review.
In 2016, Amazon’s top sellers in China accounted for only 11%. By 2020, 42% of Amazon’s top sellers will be Chinese sellers, and Amazon’s US website will account for 63% of cross-border e-commerce in China, ranking second in overall sales, second only to the United States. According to data from the Ministry of Commerce of China, China’s cross-border e-commerce import and export volume reached RMB 1.69 trillion in 2020, an increase of 31.1% over the same period. In the first half of 2021, revenue was 886.7 billion yuan, an increase of 28.6%.
Amazon started to rectify fake reviews of sellers as early as 2016, but the recent wave of reviewing reviews of reviews has reached the point of raging. Amazon stated in June that as many as 200 million fake reviews will be deleted in 2020. On July 22, Li Xingqian, Director of the Department of Foreign Trade of the Ministry of Commerce of the People’s Republic of China, expressed his opinion on the banning incident, saying that this is a period of “unacceptable” and “growth troubles” during the development of new foreign trade formats.
“In China, high-end products are really not good and can’t be sold. Our consumption is going down, and all e-commerce thinks about are foreign markets.” Tina Wang, a Hong Kong advertising company consultant who has long studied e-commerce, said: ” For overseas markets, China, especially Shenzhen and the Yangtze River Delta, has advantages in all aspects, including supply chain, quality and price, especially electrical and clothing. However, the advantages of the epidemic are about to pass, and some are affected by raw materials and shipping costs. , It’s not easy to say later.”
In 2015, Amazon established a “cross-border e-commerce global store opening team” in China. On September 17 this year, Amazon held the “Global Store Opening Ceremony in Hangzhou Cross-border E-commerce Park Upgrade” in Hangzhou.
In an interview with Chinese media, Dai Hongfei, vice president of Amazon global and executive president of Amazon Global Store Asia Pacific, said: “In the past five months, Amazon has banned about 600 Chinese brand sales license rights, involving about 3,000 seller accounts. These accounts have Amazon has repeatedly warned against abusive reviews. However, these sellers continue to violate the rules, so we decided to terminate the partnership.”
Although under normal circumstances, sellers with suspended numbers have the opportunity to appeal, but the interview with Dai Lingfei stated that “this time 600 brands have little chance of appealing.”
The reason for the title is very simple. The so-called “fake operation” means “scratching orders and reviewing comments.” Alibaba Taobao, China’s largest retail e-commerce platform, knows this “management method” all the year round and rarely interferes. If almost all sellers operate in this way, the end result is that the law will not blame the public. Buyers who often shop on Taobao know that after every purchase, the seller will often ask the buyer to post a good review and reward them with red envelopes of varying amounts. If a buyer posts a negative review, the seller will do everything possible to ask the buyer to delete the negative review, sometimes rewarding them with red envelopes, or even frequent phone calls. This trend of seeking praise at all costs is not only on Taobao, but also on other consumer platforms such as Meituan and Dianping.
Rising Chinese e-commerce companies copy domestic practices to Amazon
Beginning at the end of 2019, the sudden and persistent epidemic has pushed the consumption habits that were originally from offline to online to a new stage. According to Amazon’s financial report for the first quarter of 2021, since the beginning of the epidemic, Amazon’s profits have reached US$26 billion, exceeding the total of the previous three years, adding 50 million paid members.
According to the 2020 market report of Marketplace Pulse, an e-commerce research organization headquartered in New York, Amazon’s sales in 2020 will be US$295 billion, an increase of 47.5% from the US$200 billion in 2019. About 63% of third-party sellers in Amazon’s US store are from China, an increase of 28% over 2019. At the beginning of 2020, Amazon’s four most important stores in the United States, the United Kingdom, Germany, and Japan, about 30% of top sellers are from China, and only 11% in 2016. By the end of 2020, the proportion of Amazon’s top sellers in China has risen to a record 42%. In January this year, Amazon added 76,000 Chinese sellers, accounting for 75% of all new sellers.
The Marketplace Pulse report also mentioned that in 2020, more than 500,000 Amazon users left about 50 million reviews, 52% of which are rated American sellers, and 42% commented on Chinese sellers.
Chinese sellers copied their usual domestic practices to Amazon, creating a large number of fake transactions and fake reviews. There is even a saying in the cross-border e-commerce circle: “Swiping orders may die, but if you do not, you will undoubtedly die.”
Wang Zhe said: “Ranking is a comprehensive value. Amazon tells you which aspects can be optimized. It does not tell you the specific algorithm. Generally, it is traffic, click-through rate, purchase quantity, number of reviews, positive/negative reviews, and shipping delays. I remember Bad reviews are fatal. If a certain number of bad reviews reaches a certain number in 52 weeks, there will be no exposure, or more serious, the store will be closed.”
“Voice of America” recently joined the 500-member “North American Assessment” WeChat group, with a large number of Chinese e-commerce companies and Chinese living in the United States. This group is responsible for the function that the North American Chinese nicknamed “wool wool”: Chinese merchants introduce products to the group, and after buyers and sellers who are interested in the products connect, they go to Amazon to buy the products. After use, they leave a good comment, and the seller adds the amount of the product. Return to the buyer. Buyers get the products they want for free, and sellers get the praise they want. Everyone is happy. Of course, if product quality goes wrong, it can only be solved privately.
Careful observation revealed that most of the products sold in the group are low-priced products, such as fascia guns, yoga mats, mobile phone cases, humidifiers, sockets, picnic mats, etc., and occasionally more expensive products such as cameras and speakers. The author had a private chat with a toy seller in Shenzhen. The other party complained that nowadays the competition is fierce and it is difficult to do business. The seller said: “It really doesn’t make money to do this. We just want to comment. The product is not competitive without reviews. It is too difficult for foreigners to buy things and don’t like to leave reviews.”
The seller also explained that new products often do not have any reviews at the beginning, so this type of group relies on not making money to attract people to buy. First leave the initial reviews and accumulate them slowly. When the reviews naturally increase, the ranking will rise. Sometimes merchants even just send products directly to flush sales without asking users to leave comments.
Mr. Sun, the owner of a handicraft manufacturer in Jinhua, Zhejiang, has been selling products on eBay since 2001, and later moved to Amazon. He has been in the foreign trade circle for many years. Last year, Mr. Sun decided to withdraw from eBay and Amazon and switch to social media to do business.
For security reasons, Mr. Sun, who asked not to be named, said: “I planned to quit Amazon before the epidemic. Both Amazon and eBay quit because the cost was too high. The money turnaround period is too long and the system is getting stricter. Amazon has too many things, probably. 70% of them are Chinese sellers. No one can’t think of putting things on it for nothing. There are too many homogenized things, why can you stand out? Many people used to choose to check orders, and some people commented on fake reviews. This year Amazon cracked down on this, and many Shenzhen, China do Amazon. The big bosses are knocked to the ground. Some sales of hundreds of millions of dollars have been completely blocked.”
Amazon is not the only platform with a flood of fake reviews, and this phenomenon is not only a habitual operation of Chinese e-commerce. After the UK Competition and Market Authority began an investigation in 2020, the social media giant Facebook promised to investigate and rectify false reviews on the platform and block as many as 16,000 groups due to fraudulent product reviews.
Is the rectification just the tip of the iceberg, and where should Chinese e-commerce companies go?
Shenzhen, the center of e-commerce that has been hit hard, cannot sit back and watch. On August 13, the Shenzhen government convened a forum for cross-border e-commerce companies. Subsequently, the Shenzhen Municipal Bureau of Commerce announced the “Regulations of the Shenzhen Municipal Bureau of Commerce on Organizing and Carrying Out the 2021 Central Foreign Economic and Trade Development Special Fund Application and Acceptance Work”, encouraging companies to develop cross-border e-commerce through independent stations, with a single project funding of up to 2 million yuan.
The Shenzhen Cross-Border E-Commerce Association, established in 2014, stated that there are more than 40,000 companies engaged in cross-border e-commerce in Shenzhen, accounting for 35% of China’s business. Association President Wang Xin said in an interview with 21st Century Business Herald on August 23 that Amazon’s first batch of sellers with sales of more than 10 million U.S. dollars have been affected, and now the operation of the ban has affected sales of about 5 million U.S. dollars. The waist seller.
Wang Xin believes that many companies do not meet the conditions for independent site establishment because they have just started to enter cross-border commerce. In response to the break in the capital chain of these companies, the Association called on the government to take the lead and encourage banks to provide low-interest loans to ease funding pressure. She also believes that Amazon’s ban without giving reasons has caused many businesses to complain and deduct funds. This is a very unfair “selective law enforcement.”
However, Amazon’s website expressly stipulates which behaviors are illegal, such as giving customers gift cards, tampering with them, and buying good reviews. Amazon said the company uses manual and machine searches every week, checking nearly 10 million reviews to punish fraud.
Mr. Sun said that he has never made fake reviews and he is very in favor of Amazon’s punitive measures. “I think that not only Amazon should do this, but also domestically. These are cheating. That means I can decide everything by capital power, which is unfair to small sellers. It will form the abnormal e-commerce structure of Taobao, 100% Eighty-odd are made by the head, and other small sellers can’t make money at all. You can’t take away all the wealth by capital power. Traditional platform e-commerce is like this, one person eats enough, and the rest can only drink soup.”
Wang Zhe also agreed with Mr. Sun. She pointed out that Taobao needs to spend extra money to sell goods, and bad money will drive out good money in the long run. “The Amazon market is big, and the price can be sold. Honestly and conscientiously, there is a quantity. What Amazon encourages is not rapid monopolistic growth, but encourages honestly to make a single product or a certain type of product, and encourages long-term word-of-mouth.”
However, Amazon obviously will not abandon the hugely profitable Chinese e-commerce. At the Hangzhou event in September, Amazon announced plans to upgrade its cross-border e-commerce park and establish a seller training center in the Asia-Pacific region to provide industry professionals with full-cycle training such as language courses and policy and brand management. It is expected to open in the second half of 2022.
Amazon Vice President Dai Lingfei said in an interview with Chinese media at an event on the 17th, “In the next three years, Amazon’s global store opening in Hangzhou will expand its office operations and team size by six times to increase support for local companies.”