My previous post on Amazon.com, Inc. included a poll asking: How Ethical is Amazon? Please vote in the poll if you didn’t get a chance yet – I’ll discuss the results in a future post, and maybe dig a bit more into the social and environmental impact of Amazon. This post is going to focus the following question: How much can you trust Amazon? As mentioned in the last post, over 80% of US households pay a fee ($119, annually) for Amazon Prime membership. I still find Amazon’s level of penetration in the US staggering and I think it’s worth taking time to consider whether this is a good investment, or even whether Amazon is a good retailer. We tend to just assume that it is.
Why is Amazon so successful as a retailer?
Take a look at this graphic, showing stats on sales conversions for a typical retail website, in the form of a Sales Funnel.
The graphic above looks at sales conversions in terms of interaction with a specific retail site. In general, a Sales Funnel is often described as a progression from Awareness (of the brand) to Interest (e.g., reading reviews) to Decision (to purchase that item) to Action (an actual purchase). Amazon Advertising has a post describing the benefits of Full Funnel Marketing, in which the retailer controls most, or even all, parts of this chain.
Take a look again at the percentages above – this is an average of the top 500 online retailers, so typically 3.3% of visits to a large retail website results in a sale. In comparison, sales conversions on Amazon.com for customers who are not members of Amazon Prime was around 13% (in 2015) – roughly four times higher. Sales conversions on Amazon by customers who are also Amazon Prime members: a staggering 74%! And all of those numbers are from 2015; you can bet that they look even prettier for Amazon in 2020, the year that catapulted Bezos to #1 on the Richie Rich list. (Note that Elon Musk just passed him again, last week, but I’m sure we can look forward to them comparing the size of their bank accounts – and rockets – for some time to come.)
The importance of online reviews to Amazon
Amazon has clearly been on a mission to control a network of integrated “influencers” that funnel more customers to their site. You have information gathering and smart advertising on platforms like Fire TV, Kindle, and Alexa, and then you have a growing level of control over key research sites that Amazon acquired: IMDb and Goodreads.
Take a look at the Top Picks on IMDb – you’ll see a different selection, depending on when you look at it, but I’ll bet that there are two things of note: 1, the list isn’t particularly high-quality, and 2, it’s mainly Amazon content (click on the watch options button). Amazon’s move to acquire Goodreads in 2013 angered the publishing industry and disturbed many people who saw it as a safe space for book lovers.
With its 16 million subscribers, Goodreads could easily have become a competing online bookseller, or played a role in directing buyers to a site other than Amazon. Instead, Amazon has scuttled that potential – Scott Turow, president of the Author’s Guild, speaking to The Guardian.
No doubt, Bezos will face more scrutiny from the US Senate, this year, on whether Amazon’s tactics should be considered monopolization. In any case, one thing that Amazon’s strategy underscores by acquisitions like IMDb and Goodreads is the importance of reviews to commerce sales.
Where it all began: Amazon user reviews
In 2016, it was reported that 55% of consumers who are looking to buy a new product search first on Amazon. Again, you can be sure that this number is higher today. In the early days, Amazon was the go-to resource for product reviews, and to a large extent it still is today. Wondering which laptop or what kind of cookware to buy? Amazon was one of the best places to read user reviews. I want to focus on a few aspects of user ratings (and reviews) on Amazon, starting with the rating scale.
Why do we use a rating scale of 1 to 5 stars?
Going back to the poll (How Ethical is Amazon?) in my previous post, note that the scale went from zero to five Green Stars in half-star increments. I’ve given this a lot of thought and have decided that this is the best way to set up a rating scale. Why? Three main reasons:
1. You need to give consumers the option to score a product zero. You often see reviews (whether on Amazon or Yelp, etc.) where the reviewer absolutely hated the product and is annoyed that they have to give it a 1-star rating when they know it deserves zero.
2. A scale of 0-5 stars results in a midpoint score of 2.5, while on a scale from 1-5, the midpoint is 3 stars. This may sound trivial or pedantic, but take a look at how this looks in graphic form.
3. Allowing reviewers to score in half-point increments leaves a lot of room for subtlety. I’ve noticed this a lot since I started rating products on my new site, Ethical Bargains (for example, when reviewing Deschutes beer). When you like a product and you’re trying to decide, for example, between a rating of 4 and 5 stars, it seems that neither is fitting. You see this a lot with book reviews on Goodreads, and most people tend to award the higher of the two ratings that they are deliberating over. This isn’t satisfactory for the reviewer but it’s good for the retailer, which of course benefits from a higher rating on the product.
You can see, at this point, that the three problems with our current 1-5 star rating scale all very much skew results towards a higher average rating. Don’t underestimate the impact of all of this on your decision making as a consumer –product reviews have been central to Amazon’s success since the start.
Average ratings are rounded on Amazon.com
Another thing that Amazon does for ratings on its sites is to round the average rating to the nearest half-star. Let’s say that Amazon’s selling a pretty crappy product that has an average rating of 3.25 stars, because most people rated it 3 stars. We already established that the midpoint of the scale (3 stars) looks like better than average when it’s represented graphically. To boost this product’s image a little more, Amazon takes that average score of 3.25 and represents it with an image of 3.5 stars. So now this mediocre product ends up with an image that makes it look more attractive to consumers than the reviews would suggest.
Sponsored reviews on Amazon.com
Well, you probably know that Amazon.com has plenty of sponsored listings: the first few results for any search on Amazon are sponsored ads, rather than the top products. But did you know that many reviews on Amazon.com are also sponsored in some way? Amazon.com has its own in-house program called Vine, which involves Amazon sending free stuff to certain selected customers in return for “honest reviews”.
We have to ask, how likely are customers going to be biased when reviewing a product that they obtained for free? In the example of the cookies in the image above, a customer may be more likely to give a 5-star rating when they didn’t have to pay for the cookies. Amazon’s Vine program already sounds sketchy enough, but there’s also a less official route, where individual sellers can do the same thing.
I was a Top Reviewer on Amazon
I used to be a Top 500 reviewer on Amazon.com, because I reviewed a lot of products when starting out with the idea of the Green Stars Project. I wanted to create awareness of ethical rating in product reviews and see whether others may follow the example. The results were pretty promising in that my reviews received a good number of helpful votes – and hence my rise in Amazon reviewer rankings.
Top 500 may not sound like much, but bear in mind that my ranking before I came up with the idea of the Green Stars Project was around 20,000,000 – typical for someone who had written three or four brief reviews. Once my ranking increased, I received daily emails from sellers who wanted to send me free stuff to review.
Amazon did try to clamp down on this, but even though my ranking as a reviewer dropped over the years, I still get multiple emails every week offering free items to review. Some of them even pay extra for the review, besides sending the free item. I partook once, just to see how it would work out, and accepted an LED flashlight in return for a review. I wrote a fairly positive review and felt that I probably was more generous with the rating than if I had paid for the thing.
But not long afterwards the flashlight broke and the rechargeable batteries leaked, exposing another problem with these sponsored reviews: It’s expected that a review is written fairly promptly, so most of them aren’t really evaluating product robustness or longevity. That applies whether the product-review exchange is via Amazon’s own Vine program or this unofficial route. This is not good for consumers, or for society’s efforts to move away from throwaway culture, but again it works out well for the retailer.
Should you trust Amazon?
In this last section, I’ll briefly look at two case studies of products sold on Amazon.com. Note that I wasn’t digging around trying to find irregularities – these products just came up naturally during the course of my research for this post.
Case Study #1 – Trail mix
I was led to trail mix when I was looking into Amazon’s competitors and wondering how ratings compare for products that are sold on both sites. Target is one of Amazon’s biggest competitors in the US, so I selected one of Target’s best products, according to The Kitchn, a jar of Archer Farms trail mix. Just comparing the product on Target.com versus Amazon.com reveals two fairly shocking differences.
- The price on Amazon.com ($20.45) is 2.5 times higher than the price on Target.com ($7.99)!
- The average rating on Amazon.com (4.5) is also much higher than the same product’s rating on Target.com (3.6).
You’d have to ask yourself: How do so many people end up buying this product from Amazon.com without noticing the massive price difference? One answer is that people see the high rating and assume that it’s all good, never bothering to go a general internet search for the product. Another reason is that Amazon Prime members often look no further than Amazon.com as they’ve now locked in their loyalty by paying Amazon $119 for annual membership.
The next thing to note is that one of the Amazon customers points out that the product is available at a fraction of the cost from Target. His review scored 41 helpful votes and yet the review is not highlighted as the “most helpful” critical review – a review that received 9 helpful votes is shown instead.
I was intrigued (i.e., suspicious) that the product received such a high average rating on Amazon.com so I entered the ratings for each of the 130 reviews into a spreadsheet and averaged them. The result: 3.7, very similar to the rating on Target.com. So where did Amazon get an average rating of 4.5 from? Well there are ratings that are associated with reviews but also ratings with no review attached. These ratings with no associated review are not visible so there’s no way to trace who placed them or even verify that they exist. To bring the average rating from 3.71 to 4.5 there must have been a whole lot of 5-star ratings by people who didn’t want to write a review but were so delighted with their $20 trail mix that they felt compelled to leave a rating.
Case Study #2 – Laptop
This will be brief and then I’ll wrap up, but please leave a comment if you want to hear more about other products on Amazon.com that I investigated. I had to replace my laptop and, deciding to buy another ASUS machine (see this post on ethical laptops), I did some research online. I found an ASUS Zenbook that I was interested in buying and read some reviews on Amazon.com. A couple of the reviewers mentioned that the sleeve that’s supposed to come with the laptop wasn’t included in their package – there was an empty space in the box where the sleeve should be.
This led me down a rabbit hole of looking into reliability /authenticity of products purchased through Amazon.com (which, again, I can go into in another post if you leave a comment below). Why would I buy the laptop from Amazon.com when it might be missing a sleeve? Did the seller remove sleeves to sell them separately, hoping most customers wouldn’t notice? Who knows, maybe they replaced the chip too! I purchased the same laptop directly from ASUS for the exact same price and it arrived in 3 or 4 days – and it contained a sleeve.
There’s an environmental advantage too, of course, from ordering directly from the manufacturer as items don’t need to be shrink-wrapped and shipped to an Amazon warehouse. You cut out a whole segment of the packaging, warehousing, and transportation chain. You’re also more directly supporting the company that you purchase from, rather than let Amazon take a cut of the profit.
Why you should ditch Amazon Prime
There are many of us out there who don’t love Amazon but still use it occasionally for various reasons. I totally understand that – especially those blogger friends who have written books and feel that it would be hard to avoid selling on Amazon. I may well be in the same boat at some point. And that’s even more reason to reconsider how much fuel we want to add to the Amazon fire.
This post is not so much about Amazon’s social and environmental impact but about the company’s relationship to consumerism in general. As commenters on the last post pointed out, a central issue in asking how ethical is Amazon relates more to the company’s role in enabling overconsumption. Loyalty programs are extremely effective for customer retention – the fact that Amazon charges ($119, annually) for its loyalty program is a testament to the stranglehold the company has on US society.
Amazon is a major driving force behind excessive consumerism on this planet and some of its sales tactics are dubious, at best. I no longer trust the ratings on Amazon.com, or even some of the products on offer, for the reasons outlined above. A company that can sell a product at 2.5 times the normal price to customers who pay an annual fee for that privilege must be doing something right, and also something very wrong. Be aware of how you can be manipulated at each stage of Amazon’s giant network of full funnel marketing and, if you want to do one thing, cancel your Amazon Prime membership. If you take its power away it’ll become just a regular retailer like any other.