On Amazon’s marketplace, where independent merchants collectively sell billions of dollars in goods, Chinese sellers have become a powerful force, in part due to Amazon’s heavy recruitment of them in recent years.
But a few months ago, the e-commerce giant began suspending the accounts of some of its large and successful Chinese merchants. The reason, it emerged, was abuse of Amazon’s review system. Since then, Amazon has shuttered at least 50,000 stores operated by Chinese merchants, according to a Shenzhen-based trade group, for behaviors such as soliciting fake reviews and offering gift cards to reviewers, the latter being a normal practice in China but one that violates Amazon’s policies.
In the wake of the disruption Amazon caused to the industry of Chinese companies that rely on its marketplace, Shenzhen, China’s tech hub, is offering cross-border e-commerce companies 2 million yuan ($309,000) to set up their own online stores independent of Amazon, the South China Morning Post reports. Sellers based in the city who were affected by the crackdown were also invited to a meeting by Shenzhen’s commerce bureau as part of an effort to “study and formulate relevant solutions” to the situation, it added.
Chinese companies on Amazon’s marketplace
While Amazon routinely goes after sellers for violating its marketplace code of conduct, the new bans are notable for their scope and the high profile of suspended merchants. Companies such as Mpow and Aukey, which sold items such as headphones and chargers, respectively, have been major sellers on Amazon. Electric toothbrushes sold by Fairywill, among the companies now banned, have turned up on best-of lists from outlets such as GQ and New York Magazine.
These companies are among a growing number of Chinese businesses taking advantage of their proximity and access to China’s manufacturing to sell to shoppers overseas through sites such as Amazon and eBay. Marketplace Pulse, an e-commerce research firm, estimates almost half of sellers across Amazon’s international marketplaces are based in China, though Amazon has disputed the figures. China’s government, meanwhile, sees sellers participating in cross-border e-commerce as a means to increase its exports abroad.
Recently, however, Amazon has made a point of cracking down on suspect reviews, even with established merchants, according to a June blog post that detailed some of its efforts to allow “only genuine product reviews” on its site.
“We don’t tolerate fake or paid reviews from any seller,” an Amazon spokesperson wrote by email. “Amazon has always prioritized protecting our store from fraud and abuse and taking the appropriate actions to hold bad actors accountable.”
Many Chinese companies, guided by Shenzhen Cross-Border E-Commerce Association, are now looking for alternatives to Amazon. Some are turning to rivals such as eBay, while others are looking to Shopify, an e-commerce platform that specializes in allowing businesses to easily set up digital storefronts, and which has described itself as “arming the rebels” against Amazon.