A staggering £23bn a year of UK consumer spending is now influenced by online customer reviews, the Competition and Markets Authority (CMA) estimates. But a series of Which? investigations over the past year have highlighted the impact fake reviews have on these ratings and in turn, on consumer confidence.
Amazon Marketplace appears to be a particular target, and overwhelmingly, the products in question all come from one place – Shenzhen, in the Guangdong province of China.
This might seem surprising, until you hear that more than 90% of technology products sold in the UK come from Shenzhen. What was once a cluster of small villages and provincial towns, and home to around 30,000 residents, has in just four decades exploded into a sprawling metropolis of more than 12 million people.
Shenzhen underwent this transformation after being designated as China’s first special economic zone in 1980, and has become widely regarded as the biggest hub of electronics manufacturing in the world. Shenzhen is to hardware what Silicon Valley is to software.
So just how is this distant city driving the UK’s fake reviews problem? We investigated the booming industry of online marketplaces in Shenzhen and found:
- 32% of Amazon UK sellers are based in Shenzhen
- 40% of the new sellers on Amazon in 2018 were based in China
- ‘White label’ markets are driving competition and, in turn, fake reviews
In a recent investigation we revealed the highly rated Amazon products that failed to impress in our test labs.
The rise of China-based sellers on Amazon
Shenzhen is home to 32% of the third-party Chinese sellers on Amazon, according to research by Marketplace Pulse, which analysed location data for more than 250,000 sellers.
Combined with Guangzhou, the two cities in the Guangdong region account for more than 35% of China-based sellers on Amazon Marketplace.
The number of Chinese businesses selling through Amazon Marketplace is increasing steadily, too. In the UK alone, Chinese sellers represented 36% of the top 10,000 sellers in September 2019, up from 30% the previous year.
More than 1.2 million sellers across the world joined Amazon in 2018 – more than two new sellers every minute.
Of the new sellers on Amazon’s UK site, just one in ten were based in the UK. The vast majority (40%) of new sellers were based in China, and this number could be even higher, as 26% of sellers don’t disclose a location.
What’s behind such significant growth, and what does the increase in competition mean for sellers and buyers on online marketplaces? First, let’s visit a white label market in Shenzhen.
Tech products from Shenzhen
Throughout the city of Shenzhen are huge shopping malls – part of the region’s culture of product development and distribution.
Here, businesses and entrepreneurs shop for ‘white-label’ goods that anyone can package up and sell under any brand they like.
Inside these markets are stacks of unbranded hardware – you select the product you want and place an order for potentially thousands of units. These are modified and programmed, before being given a brand name and sold through online marketplaces around the world.
We spoke to David Li, a tech-industry expert who works in Shenzhen to promote genuine innovation and development in the city. He told us that in the past, sellers were able to make very easy money, but things are getting much tougher.
Most products on sale through white-label markets are tech based, and these are often outdated as soon as they hit the shelves – this means sellers need to shift hundreds or potentially thousands of units quickly, while competing with thousands of other sellers, and this means they may turn to ‘black hat tactics’.
Black hat tactics on Amazon
Competition combined with a need for speed has resulted in sellers engaging in practices that are against Amazon’s terms and conditions – such as fake reviews.
To find out exactly how they go about it, we spoke to Davide Nicolucci, founder and director of the Amazon marketing consulting firm Growth Hack. He’s critical of sellers using dishonest means to manipulate the rankings, but told us sellers are constantly looking for ways to side-step the rules, and are compelled to break them despite the risks.
We’ve covered a range of black hat tactics previously, including:
- The use of Facebook groups to source incentivised reviews
- Thousands of unverified reviews being used to inflate product rankings
- The abuse of Amazon’s product variation tools
The race to a higher ranking has also created a booming cottage industry for online marketplace ‘experts’, according to Li. Sellers network over deals in the busy markets, learning of the latest tactics to bypass Amazon’s reviews algorithm, while Amazon marketing courses are advertised on large billboards above them.
According to Nicolucci, a wide variety of businesses offer sellers training in the ways to manipulate Amazon’s ranking system to promote products, protect accounts from disciplinary actions and crush competitors. Many of these businesses are based in China, but it’s a worldwide market.
How do products get from Shenzhen to Sheffield?
Amazon’s fulfilment program is a key driver behind the increase and success of Chinese sellers.
It allows sellers to ship products to one of Amazon’s fulfilment centres, meaning they’re packed and distributed by Amazon when an order is placed – taking away the timely and costly logistics of shipping each order from China. These products appear with a ‘fulfilled by Amazon’ label on the online listing.
The products can also be added to the Amazon Prime scheme for even faster shipping.
Don’t get caught out – follow our tips on how to spot a fake review.
What’s being done to tackle fake reviews?
In June, we reported on research by the Competition and Markets Authority (CMA). It revealed ‘troubling evidence’ of a thriving marketplace for fake online reviews on eBay and Facebook.
In the US, Congressman Frank Pallone Jr and Congresswoman Jan Schakowsky from the House Committee on Energy and Commerce, wrote to Jeff Bezos, chief executive of Amazon, raising concerns about fraudulent and deceptive product ratings and reviews on Amazon’s online marketplace.
The lawmakers, who wrote in July, questioned whether Amazon benefits financially from the sale of products promoted by fake ratings and reviews, and asked for details about steps taken to tackle the issue. A deadline of 30 July was given, but at the time of publication Amazon hadn’t responded.
Competition from Chinese sellers is increasing across multiple online marketplaces, and the race to the top of Amazon’s search rankings is becoming increasingly murky.
Help Which? fight fake reviews
Fake reviews muddy the waters and mean you may not be getting what you expect. Sign our petition to help stop fake reviews if you believe in a more transparent online shopping experience for consumers.
And if you’ve come across online customer reviews you think are suspicious and may be fake, or have been approached to write an incentivised positive review for a product, you can help by sharing your experience. Get in touch and tell us your story – email the Which? Fake Reviews team at firstname.lastname@example.org.