On October 3rd, Amazon announced on their blog they will no longer permit providing free or discounted products in exchange for reviews, effective immediately. If sellers continue to offer these incentives in exchange for reviews, their Amazon privileges may be suspended or revoked. However, sellers can still offer discounts and promotions to customers as long as they are not offered in exchange for reviews.

What's Changing

Before, reviewers were able to receive incentives as long they disclosed that fact. Today, the new guidelines prohibit incentivized reviews unless they are assisted by the Amazon Vine Program. The Amazon Vine Program invites Amazon reviewers that they find helpful and trustworthy to post opinions on new and pre-released products. Instead of compensating these reviewers, Amazon Vine limits the number of reviews they display for each product. The new policy eliminates the use of third-party services to provide incentivized reviews as well.

Amazon states these changes will apply to all categories besides books. They will continue to allow advanced review copies of books. Perhaps this decision was foreshadowed by their improved review ratings system through a machine-learned algorithm earlier this year. The new algorithm is said to give more weight to newer and more helpful reviews. The algorithm also applies more strict criteria to qualify for the Amazon-Verified Purchase Badge. And is if that wasn't enough, Amazon also included suspending, banning, or suing thousands of people for attempting to manipulate reviews. Prior to purchase, it’s harder to prove whether or not a review has been manipulated. So how will Amazon know how to prove this in their new algorithm?

How it Will Affect Sellers

This new edit affects sellers trying to earn the Buy Box and Chinese sellers climbing up the rankings in a few major ways.

Competing for Rankings

Before the change, domestic and international sellers used Amazon-Sponsored Listings and Amazon Lightning Deals to rank up listings in search results. These sellers would also give away items or at a small price with free shipping in exchange for hundreds of reviews. Their rank would go up, and as result sales would go on auto pilot. Now that this is no longer accepted, sellers will need to spend more money on Amazon-sponsored advertisements, which increases the cost of doing business on Amazon. It will also be harder to win the Buy Box without the advantage of surplus reviews, which trickles down to their eligibility as an FBA or Merchant Fulfilled Prime seller. Good customer feedback is a requirement for both of these badges.

Competing with Chinese Sellers

Sellers in America will have a hard time competing with Chinese sellers who are tagging onto listings and stealing them because the Chinese sellers are able to send cheaper products with free shipping. Chinese sellers don’t have to pay FBA fees, so they have less overhead than a domestic seller who pays FBA fees on top of fees in exchange for product reviews. Private label sellers are especially at risk because their products are easier for Chinese sellers to counterfeit and get product reviews from other sites like Craigslist. Third-party review sites that offer exchange compensation are also widely used.

One owner of an eCommerce merchandising company told us in an email they have experienced trouble with Chinese sellers.

"New Chinese sellers, as well as sellers from other countries, which I'm guessing in most cases are China sellers opening up accounts in other counties, is beyond out of hand," they said."They are selling bootleg merchandise using multiple accounts.  They keep adjusting their technique and our days have turned into coming up with ways to handle China rather than how can we buy good merchandise and make a great buying experience for our customers."

This policy, amongst the many others announced this year, was likely put in place to protect the Amazon brand. If customers continue to receive poorly made products with Chinese labels on them, Amazon could see a decline in sales. Without the help of customer reviews, the future of private label sellers is in danger.