How Chinese sellers influencing Amazon in 2024

How Chinese sellers influencing Amazon in 2024

May 29, 2024
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Author: Jessica

In China, Amazon sales are massive. In fact, according to our own research, more than 63% of all third-party sellers on Amazon are Chinese.

This article will examine the number of Chinese Amazon sellers as well as the strategies they employ to take advantage of the platform. We'll also take a closer look at some of their time-tested strategies.

In this article you will learn:

  1. What Is the Number of Chinese Sellers on Amazon?
  2. How Can You Spot a Chinese Amazon Seller?
  3. Why Do Chinese Sellers Predominate?
  4. Why Chinese businessman prefer Amazon?
  5. Why Amazon prefer Chinese Sellers?
  6. To what extent do your rivals import goods from China?
  7. The reasons behind why China government love Amazon
  8. Which Black Hat Strategies Are Successful Chinese Sellers Using?
  9. Using False Reviews to Trick Purchasers
  10. Review Upvoting
  11. Products that are Fake and Listing Hijacking
  12. False Intellectual Property Claims
  13. Information about competitors that Amazon employees leaked
  14. Listing Sabotage
  15. Abuse Variations
  16. "Stealthy" and covert Amazon selling accounts
  17. Avoidance of duties and taxes, falsifying invoices, and misclassifying HS codes
  18. Annotations on Accounts
  19. What Is Amazon Able To Do?
  20. Conclusion



Using False Reviews to Trick Purchasers What Is the Number of Chinese Sellers on Amazon?

Our most recent study, which can be found in our linked article Amazon Third Party Seller Breakdown by Country, indicates that more than 63% of third-party sellers are from Hong Kong or mainland China.

Comparatively, just 34.8% of all third-party sellers are American sellers.

Additionally, an estimated 1,500,000 sellers are active on Amazon. Therefore, a quick calculation indicates that there are probably nearly a million Chinese third-party sellers on Amazon.


How Can You Spot a Chinese Amazon Seller?

It's now very simple to find out if an Amazon seller is Chinese. It began disclosing each seller's address information in 2020. The address of a third-party seller will appear when you simply click on their name.


Why Do Chinese Sellers Predominate?

To begin, let's create a love triangle: Chinese entrepreneurs are in love with Amazon, Chinese government officials are in love with Amazon, and Amazon itself is in love with Chinese entrepreneurs. Let's look at the reasons behind this romance as well as the quantity of Chinese vendors.


Why Chinese businessman prefer Amazon?

China is arguably one of the few nations that is most at ease with e-commerce. Revenue from the two biggest Chinese websites, JD.com and Taobao.com, is $67 billion and $40 billion, respectively. When combined, this amount is more than 40% of Amazon's revenue. Recently, Chinese online marketplaces like Wish, TEMU, and Aliexpress have become increasingly popular among American customers. This, along with China's long history of manufacturing, explains why there is such a great desire to sell on Amazon.

There is a large ecosystem of courses available here that teach people in China how to sell on Amazon, with prices as low as $30 USD.

Additionally, there is no shortage of internet marketers pitching this fantasy. For $5 to $100, dozens of courses covering every topic that is sold on Amazon are available on a well-known Chinese e-learning platform.


Why Amazon prefer Chinese Sellers?

Offering products at the lowest possible price is Amazon's mission. Getting sellers as close to Chinese factories as possible is one way to deliver the flattest supply chain and accomplish this goal.

The English-translated Chinese version of the Amazon Selling portal aggressively advertises to aspiring Chinese sellers how simple it is to begin selling on Amazon.

Regular summits in Mainland China are one of the ways Amazon actively seeks out more sellers. These conferences are now held annually in multiple cities across the nation, drawing thousands of attendees who are interested in selling on Amazon as well as those who are current Amazon sellers.


To what extent do your rivals import goods from China?

Not only do Chinese vendors exist, but so do rivals in the US who market goods from China.

In the US, custom import records are available to the public. You can easily search for a company name and find out how much it imports from China using a variety of tools.

My go-to tool for this is the less than $40/month, is the review analysis tool from VOC.AI. These tools will compile all the details, like product type, quantity, and supplier name and address, that are included on a specific company's Bill of Lading.


The reasons behind why China government love Amazon

Image source: blokt.com

It is possible that up to 25% of all third-party sellers on Amazon are based in Shenzhen, China.

The Chinese government is also very interested in any kind of international e-commerce. Why? Exports are what cross-border e-commerce entails, and the Chinese government is in dire need of them given the sharp decline in exports following COVID and a broader trade spat with the United States.

Shenzhen, China's Silicon Valley, is home to the bulk of Chinese Amazon sellers. The Chinese government has contributed to the development of multiple industrial parks in Shenzhen, including China South City (华南城), which is almost exclusively used by e-commerce sellers. Provincial governments have also jumped on board. For example, Zhejiang has created "Cross-border E-Commerce Experimental Zones" with the goal of encouraging local manufacturers and sellers to engage in cross-border e-commerce (Zhejiang claimed to have over roughly 80,000 cross-border sellers).

Which Black Hat Strategies Are Successful Chinese Sellers Using?

Chinese sellers employ a number of dishonest selling techniques, such as:

  1. False evaluations
  2. Products that are counterfeit
  3. Undermining rivals' product listings
  4. False Intellectual Property Claims
  5. Abuse of variation
  6. stealing data from within Amazon

Below, we'll go over each of these strategies in more detail.


Using False Reviews to Trick Purchasers

It's no secret that one of the key elements influencing a customer's decision to buy anything on Amazon is the customer's reviews. It follows that it should come as no surprise that Chinese sellers abuse this tactic the most.

Originally from Detroit, Zach Franklin of AMZKungfu is a well-liked non-Chinese Amazon consultant for Chinese sellers. He currently resides in Shenzhen, China. He told me that based on his observations, at least 50% of Chinese sellers are breaking Amazon's terms of service by employing some kind of review strategy. "For many Chinese Amazon sellers, the question of how to succeed on Amazon has a simple answer: reviews equal sales," Zach explained to me.


Over 50% of Chinese sellers, according to Zack Franklin, a consultant for Chinese sellers, use some form of black-hat review strategy. However, Franklin emphasizes that most Chinese sellers would prefer to develop genuine, defendable brands without using such tactics.

There are two types of review strategies used by Chinese sellers: paying or rewarding actual customers for positive reviews, or using a more extreme method of placing fictitious orders and using zombie Amazon accounts to leave positive reviews. Even though Amazon battled valiantly to stop fake reviews—and the FTC even intervened in a few instances—fake reviews are still a major problem in 2023.


In order to avoid raising Amazon's suspicions, fake review companies, which are almost exclusively based in China, create hundreds or thousands of "zombie accounts," which are fake Amazon accounts that mimic actual customer browsing behavior. A Chinese selling consultant who requested anonymity stated that fake reviews typically range from $3 to $5, depending on the likelihood that Amazon will find them.


Review Upvoting

Acquiring as many reviews as possible is one aspect of a seller's review strategy. Reducing the number of negative reviews is, nevertheless, an additional component of a review strategy.

The amount of upvotes or downvotes a review receives determines, at least in part, whether it appears near the top of all reviews. It should come as no surprise that services exist to assist in upvoting a positive review in an effort to push out negative reviews.


Products that are Fake and Listing Hijacking

Offering fake goods is the next nefarious strategy used by Chinese sellers to prosper.

Amazon is struggling greatly with fake goods. "We also may not be able to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies," Amazon acknowledged in its earnings report earlier in the year. "In addition... we could face civil or criminal liability for unlawful activities by our sellers."

The main source of the issue is that, similar to eBay, Amazon is a marketplace where different sellers can list and sell the same product. When products are sent to its warehouses, Amazon does not actively verify whether or not they are authentic goods. Rather, it solely depends on whether or not the item has the correct UPC barcode. If a dishonest vendor prints a phony UPC bar code and attaches it to their counterfeit merchandise, Amazon will consider it to be authentic.

One of the biggest threats to Amazon, along with fake reviews, is the problem of counterfeit goods. To combat this, the company has implemented a number of initiatives. In 2018, Amazon launched the Transparency program, which provides sellers with unique, trackable barcodes for its products. They also launched Project Zero earlier in the year, which offers sellers more power to take down fake sellers from their listings.

Although the Project Zero and Transparency initiatives are commendable moves in the right direction, they do not completely solve the issue of counterfeit goods. Sellers are still responsible for keeping an eye on their listings and the entire Amazon marketplace to make sure there are no counterfeit products.


False Intellectual Property Claims

Amazon has taken a very strong stance in favor of purported intellectual property holders in its never-ending battle against counterfeiters (see above).

There are several ways that this can occur, but the following are two instances:

  1. Patent holders are suing Amazon for the removal of the listings after submitting "questionable" IP infringement claims in court and through Brand Registry.
  2. sellers who include content protected by copyright into a rival listing; the copyright holder then files a notice of infringement against the rival.


Information about competitors that Amazon employees leaked

The information that Amazon employees were stealing and selling internal reports about sellers to their rivals was first made public by EcomCrew a number of years ago. Amazon declared they would crack down on such leaks after the story was picked up by a number of mainstream media outlets, including the Wall Street Journal. They stated, "We hold our employees to a high ethical standard and anyone in violation of our code faces discipline, including termination and potential legal and criminal penalties."

Although the practice persisted well into 2024, Amazon and the US Department of Justice actively pursued anyone found guilty of taking part in this information theft, even going so far as to arrest and sentence a well-known Amazon attorney.

Despite Amazon's promises to take action, reports leaked by employees are still widely circulated.

Internal ASIN reports are still available from many resellers, as the screenshot above illustrates. Furthermore, it was widely reported in 2023 that Telegram groups were still openly and publicly offering account annotations for sale (which are internal Amazon reports that display notes made by staff members regarding a seller).

This is how it operates: mid- to senior-level staff members at Amazon China have direct access to the company's internal network, giving them access to all sellers' private information. Corrupt Amazon staff members will take a competitor's business report, which includes details like the number of times a product was viewed, bought, and the total sales of those products, and use it to their advantage.

An illustration of a pilfered ASIN report from Amazon, displaying private search data for a specific item.

Additionally, Chinese workers will resell Amazon customer data. This data can be used for a multitude of purposes, ranging from launching targeted advertising campaigns to discreetly contacting a customer to request that they remove a negative review in exchange for a reward.

These reports come in a wide range of prices (the reports from websites that are only in Chinese are usually cheaper). Individual customer records can be purchased for $3, while stolen reports can start at $20 per piece. According to a Chinese reseller of this information who asked to remain anonymous, the cost will vary based on how likely it is that the employee will be fired if they access the information.


Listing Sabotage

One tactic that dishonest sellers frequently employ is sabotaging competitor listings.

There were numerous reports in July 2023 that at least one Telegram group was publicly endorsing rival sabotage. The service providers advertise, among other things, that they will take down a seller's product listing page for a certain amount of time (though this duration is not guaranteed).

This Telegram screenshot shows a service provider brazenly endorsing rival sabotage on Amazon.

Typically, this service involves inserting malicious keywords into a rival's listing without the competitor's knowledge in order to cause specific Amazon algorithm bots to remove a product. The most frequent malicious keywords have to do with adult products (Amazon has tight policies regarding them), are dangerous (like pesticides), or pose a health risk (like injecting certain COVID keywords like Ivermectin).

But how can one change a rival's listing? Multiple sellers are able to use the same listing on Amazon. Similar to Wikipedia, it operates on the "community contribution" model, allowing any seller to potentially edit a listing. The idea is that the best images to depict a product, its description, etc. will be chosen by the community. Most of the time, community contributions are successful, but occasionally, bad actors go too far, as demonstrated by The North Face's alteration of dozens of Wikipedia pages to promote their products. With Amazon, the same thing takes place.

For the purpose of deciding which suggested changes are adopted and which are not, Amazon has a complex hierarchy. Seller Central clients—that is, vendors who sell goods to Amazon rather than on Amazon—have the highest priority, as malicious sellers have discovered. Consequently, in the world of selling Amazon services on the black market, fake Seller Central accounts are in high demand. Furthermore, it is possible to buy off Amazon employees so they make the changes themselves, which nearly always take precedence over any input from users.

That being said, listing sabotage takes other forms besides keyword injection. One malicious competitor, for example, changed almost every listing of yoga balls on the first page of Amazon's search results during the Christmas season of 2018 to display a picture of a PlayStation 4 instead of yoga balls. What is the outcome? Customers who were confused either decided not to purchase the yoga balls at all or, worse, purchased what they believed to be PlayStation 4s only to receive yoga balls in exchange.


Abuse Variations

A product on Amazon might have multiple versions. For instance, an Instant Pot might come in various sizes, or a shirt might come in multiple colors.

Once more, any seller has the option to modify an already-existing product in accordance with the community contribution model. When a seller adds a variation that a customer would anticipate, like a different size or color, this works well. One way cunning sellers manipulate the system is by adding a totally unrelated product to "suck in the review juice" from the current listing.

For instance, if I were to start selling kitchen spatulas, I could add my spatula to the Instant Pot listing above as a different variation. Because Amazon typically aggregates reviews from all variations, it would appear as though my brand-new kitchen spatula had 37,970 reviews.

However, adding an entirely new product as a variation to a well-liked product usually draws attention from Amazon and customers rather quickly. In order to avoid raising red flags, astute sellers are even going so far as to look for discontinued products in Amazon's catalog that have a large number of reviews and add their items as variations to these listings.


"Stealthy" and covert Amazon selling accounts

When it notices activity that violates its terms of service, Amazon takes swift action to suspend sellers. These sellers lose the ability to sell products worth hundreds of thousands or even millions of dollars, in addition to losing the ability to sell on Amazon. Despite the fact that it is clearly against Amazon's terms of service, many Chinese sellers covertly create multiple "Stealth Accounts" on Amazon Seller Central in light of these risks.

While it's not against the law to have multiple seller accounts on Amazon, sellers should be aware that the platform is adept at linking accounts, so if one is suspended, it usually means all of the seller's other accounts are suspended as well. As a result, sellers take great care to conceal the identities of these accounts; in fact, a lot of Chinese sellers demand that their employees open accounts in their names but under the company's management. In order to prevent Amazon from discovering any IP sharing, these accounts are frequently even used with different internet service providers.


Avoidance of duties and taxes, falsifying invoices, and misclassifying HS codes

One more way Chinese sellers are outcompeting domestic sellers is by not having to pay the applicable duties when importing goods into the United States.

The majority of Chinese products have duties since the beginning of the trade war in 2016, but many Chinese sellers purposefully falsify invoices and misclassify products to avoid paying these duties altogether. As a result, their expenses are reduced, giving them a competitive edge over vendors who legitimately import their goods.

The cost of the goods declared to the United States directly affects how much duty one must pay. Border Patrol and Customs (CBP). Many sellers will purposefully fabricate invoices in order to intentionally underreport to CBP the true cost of their goods in order to get around this. The end effect may be significant duty savings. Regretfully, Amazon has little incentive to verify this information either, even when a seller uses Amazon's own custom broker, and CBP has very limited resources at its disposal to verify these invoices of foreign sellers.

Another method Chinese vendors use to evade paying duties is to purposefully misidentify the goods they are bringing into the country. An importer may be able to avoid paying any duties at all by using one of the specific classes of products (referred to as HS Codes when importing) that are exempt from duties. Over the years, I've worked closely with a number of Chinese suppliers who also sell on Amazon, and almost all of them have told me that they purposefully misclassify their goods or underdeclared their products in order to avoid paying the full amount of duties.


Annotations on Accounts

Amazon records internal notes about a seller's account when it suspends a product or an account. For better or worse, sellers cannot access this information.

You can view internal notes about policy violations from Amazon by viewing an annotation report.

Amazon employees who steal these reports can provide sellers with a copy of these internal annotation reports in exchange for a fee. These reports frequently provide information about the blackhat tactics a seller is employing, both ones that Amazon is aware of and ones that it is not. This information can be used to both restore a suspended account and prevent future suspensions.

By the way, there have been at least a few high-profile cases of Amazon employees, consultants, and lawyers being arrested as a result of theft of these internal reports.


What Is Amazon Able To Do?

For the most part, Amazon is a victim of its own success. It has given tens of thousands of business owners a platform to succeed financially. And inevitably, a wave of malign actors follows that rush of money and opportunity.

I believe that Amazon could take the following several concrete steps to assist in the eradication of many of the issues covered in this article:

  1. Give Brand Registered sellers who encounter a high percentage of counterfeit sellers more frequent access to brand-gating.
  2. To close the gap in the black market for stolen reports, provide sellers with more information about search history and product performance. Although Amazon has launched programs like Product Opportunity Explorer, there is still a dearth of data.
  3. Don't permit listing contributions from anyone other than the product owners who are Brand Registered.
  4. Continue to actively pursue legal action against sellers engaging in unlawful activity (through private lawsuits as well as cooperation with local law enforcement).
  5. Better inform Chinese sellers about Amazon's regulations and policies through their already extensive conferences and seller training programs.

These are some reasonably simple actions that could be taken to improve the customer experience as well as level the playing field for non-Chinese sellers.


Conclusion

It's crucial to note at this point that Chinese sellers are not the only ones using Amazon for gaming. Anybody who has been an Amazon seller for any length of time knows that sellers who use dubious marketing strategies have a variety of passports.

Many of them from almost every continent in the world that I have personally met. "Most [Chinese] sellers I know just want to build a real, defensible brand," stressed Zach Franklin. They're experimenting with Facebook, Adwords, influencer marketing, and a real presence off of Amazon in addition to hiring better copywriters and designers. They work from 9 am to 9 pm, six days a week, because they want to complete tasks correctly.

It appears that Amazon lets almost any kind of selling strategy go unnoticed until a barrage of bad news hits that puts its profits in jeopardy. According to what a Chinese service provider told me, Amazon ignores employee data leaks that reveal competitor information. It causes them no harm.

Amazon claims to be the "World's Most Customer-Centric Company," but this is frequently at the expense of its merchant partners. Customers' interests and sellers' interests, however, are frequently in line. Customers and well-behaved sellers are not helped by dishonest sellers who use phony reviews and sell fake goods.

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