Obscure Chinese makers of everything from wireless headphones to kitchen mops that wanted to crack the U.S. market for several years have turned to the world’s biggest e-commerce company for help. They use an Amazon.com Inc. program called Fulfillment by Amazon (FBA) that allows third-party merchants to store their goods in its warehouses and let the U.S. company handle delivery, returns, and exchanges. To get attention on Amazon’s sprawling marketplace, many Chinese sellers offer freebies or even cash to consumers willing to write favorable product reviews. Amazon once allowed such incentives in exchange for reviews to help introduce products to customers. But it began discouraging the practice in 2016, realizing freebies compromised the integrity of customer reviews. Many merchants ignored the new rules by recruiting shoppers on Facebook and reimbursing them via PayPal to elude Amazon’s detection, and the problem persisted.
Although review incentives—except those solicited through Amazon’s own Vine review program—violate rules, for years the company was eager to have more Chinese merchants offering an abundant supply of low-priced goods via FBA and didn’t seem to aggressively enforce its policies. But now Amazon is cracking down on pay-for-praise schemes, which can include other forms of consideration for reviews including free extended warranties, discounts or refunds, or gift cards, as the company looks to restore a sense of order to its previously free-wheeling marketplace. Starting in the second quarter, Chinese industry observers say, the company abruptly changed course and began suspending retailers and freezing their inventory at its U.S. warehouses. More than 50,000 Chinese retail accounts have lost their place on the platform, resulting in lost sales of 100 billion yuan ($15.4 billion), according to the Shenzhen Cross-Border E-Commerce Association.