There’s a new type of shadow market operating in the wings of Amazon’s mammoth e-commerce kingdom, and to a lot of people, it looks an awful lot like grift.
It’s the practice of paying people to write reviews of products sold on the platform, including many sold by third-party sellers who might not have the utmost dedication to product quality.
A Reuters piece released today provides anecdotal evidence of Italians, in particular, making ends meet during the coronavirus era by writing such paid reviews – pointing out that Amazon’s sales have increased 31% in Italy year-over-year, and that Amazon plans to build three more distribution centers in addition to the two already existing in the Italian boot.
“The extra cash is a welcome relief for many in a country which has just suffered its worst recession since World War Two, with 444,000 jobs lost in 2020,” writes Riccardo Bastianello, “(but) consumer groups say Amazon should do more to protect shoppers from being misled by the review scam.”
At the same time, we’re seeing a new bill emerge stateside to scrutinize current e-commerce deals, and particularly sales by third parties.
“A new bill that could require online marketplaces to verify and disclose third-party seller information to consumers has been reintroduced to the Senate,” writes an author at The Fashion Law identified only as ‘TFL.’ “Following a similar attempt in the House of Representatives and before that, an earlier bid in the Senate, the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act … was reintroduced on March 23 by Senators Dick Durbin (D-IL) and Bill Cassidy (R-LA) in an effort to ‘combat the online sale of stolen, counterfeit, and dangerous consumer products by ensuring transparency of high-volume third-party sellers in online retail marketplaces.’ Specifically, the INFORM Act would require online retail marketplaces in the U.S., such as Amazon, to authenticate the identity of ‘high-volume third-party sellers,’ i.e., sellers that have entered into 200 or more discrete transactions in a 12-month period amounting to an aggregate total of $5,000 or more.”
These are only part of the controversy around Amazon at the moment – while the company has won some recent victories in Europe regarding its cloud services operations according to WSJ, when it comes to the burgeoning e-commerce business that makes Amazon part of the US top five companies in technology, privacy concerns and other issues continue to emerge, and Amazon leaders participate in ongoing antitrust investigations at the federal level. Keep all of this in mind for your tech portfolio plays.
