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Retail Channels
20 July 2022
With lawsuit over fake reviews, Amazon targets Facebook groups
Amazon is taking aim at the administrators of more than 10,000 Facebook groups.

Amazon is taking aim at fake reviews. (Photo by Christian Wiediger on Unsplash)
As it seeks to root out fake reviews appearing on its platform, Amazon is targeting Facebook groups where they are sourced.
The news: Amazon filed a lawsuit this week against the administrators of more than 10,000 Facebook Groups. The company said these administrators acted as brokers of fake reviews, offering money or free products in exchange for writing misleading missives about items being sold on Amazon. The reviews appeared on Amazon stores in the US, UK, Germany, France, Italy, Spain, and Japan.
What’s a fake review? Amazon pioneered the product review in some of its earliest days in 1995, providing shoppers with a way to view authentic feedback about an item as they made a decision about whether to buy it. Fake reviews turn this idea on its head, as brokers offer compensation in exchange for a review that is favorable to a product. While five-star reviews can help improve a product's standing on Amazon, fake reviews dilute the authenticity of the information shoppers are receiving. This problem has only grown as Amazon’s third party marketplace has gained more prominence. While Amazon formally banned incentivized reviews in 2016, fake reviews have grown into what Amazon calls a “nefarious industry” in recent years, the company has said.
What are a couple of examples?
- In its latest lawsuit, Amazon cites one group called “Amazon Product Review,” which had more than 43,000 members before Meta shut it down earlier this year. It offered refunds or other payments people who left fake reviews on camera tripods and car stereos.
- Another group called “Amazon Varified Buyer & Seller” had more than 2,500 members. The administrators of this group looked to sell the reviews to Amazon sellers for $10 each, CNBC reported.
Action taken: Since 2020, Amazon said it has reported more than 10,000 groups to Meta where fake review activity is taking place. The Facebook owner has shut down more than half of the groups, and continues to investigate others, Amazon said. However, more groups continue to appear as others are removed.
What is Amazon seeking with this lawsuit? Amazon said it will use information gained in the lawsuit to identify the people behind the fake reviews, and remove them.
What else is Amazon doing?
- Amazon takes its own action against fake reviews, employing investigators and machine learning tools to identify and block them. In 2020, the company said it stopped more than 200 million reviews.
- It has also turned to legal action in an attempt to shut down the sources of these reviews. Earlier this year, it filed a lawsuit that aimed to shut down fake review brokers AppSally and Rebatest. Last year, the company also took legal action that resulted in the closure of fake review sites in Germany and the UK.
Key quote: “Our teams stop millions of suspicious reviews before they’re ever seen by customers, and this lawsuit goes a step further to uncover perpetrators operating on social media,” said Dharmesh Mehta, Amazon’s VP of selling partner services, in a statement. “Proactive legal action targeting bad actors is one of many ways we protect customers by holding bad actors accountable.”
What are regulators saying? There's pressure to address the issue. The Federal Trade Commission last year warned 700 companies, including Amazon, that they could face potential fines over fake reviews. For its part, Amazon writes that, “Permanently ridding fake reviews across retail, travel, and other sectors will require greater public-private partnership, including collaboration between the affected companies, social media sites, and law enforcement, all focused on a goal of greater consumer protection.”
Further reading: “Amazon is trying to crack down on fraudulent reviews. They’re thriving in Facebook groups,” The Verge, 2020.Don’t waste another dime on bloated channel reporting and vanity metrics.
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Amazon ecommerce sales fell 2% in holiday quarter
On an earnings call, CEO Andy Jassy outlined the thinking behind the company's cost-cutting in 2022.
Amazon Prime. (Photo by Andrew Stickelman on Unsplash)
After two years of exceeding even its own high bar of bigger and faster, Amazon is in the midst of a slowdown period.
Results from the fourth quarter of 2022 provide plenty of evidence.
- Net sales grew 9%. Overall sales grew 8.6%, marking the slowest holiday quarter growth in 10 years, according to GlobalData Managing Director Neil Saunders.
- Ecommerce, characterized as “online stores” by Amazon, fell 2%.
- Outlook for the first quarter remains 4-8%, which remains in a "light" zone by Amazon standards, CNBC reported.
On an earnings call with analysts, Amazon executives cited a consumer pullback amid rising inflation.
“In our worldwide stores business, with the ongoing economic uncertainty, coupled with the continuation of inflationary pressures, customers remain cautious about their spending behavior,” said CFO Brian Olsavsky. “We saw them spend less on discretionary categories and shift to lower-priced items and value brands in categories like electronics. We also saw them continue to spend on everyday essentials, such as consumables, beauty and softlines.”
Despite the wider pullback, events such as the first Prime Early Access Sale, Black Friday and Cyber Monday outperformed expectations, Olsavsky said.
Third-party sellers were an especially big driver of sales, as they accounted for 59% of overall sales. Sellers aren’t only driving sales, but also Amazon’s business. Amazon’s segment called third-party seller services, which includes Fulfillment by Amazon, grew 20% year-over-year.
Advertising revenue also continued to be a bright spot, rising 23% year-over-year.
Yet it is also a time when Amazon is pulling back. CEO Andy Jassy joined the call, and outlined several of the ways that the company has sought to cut costs.
In Jassy’s first year as CEO, a big priority was scaling back in fulfillment and transportation. In early 2022, Amazon said it overbuilt its logistics and warehouse network during the pandemic as it sought to scale up quickly to meet the massive demand for ecommerce. So one of Jassy’s priorities in his first year as CEO has been to pull back.
Jassy outlined the cycle:
“Over the last few years, we took a fulfillment center footprint that we've built over 25 years and doubled it in just a couple of years,” Jassy said. And then we, at the same time, built out a transportation network for last mile roughly the size of UPS in a couple of years. And so when you do both of those things to meet the huge surge in demand…it took everything we had. And so there's a lot to figure out how to optimize and how to make [it] more efficient and more productive.”
It’s “a different network” now, Jassy said, and the process of bringing it back into balance is still underway. In the early part of 2022, Amazon delayed some builds and mothballed other facilities.
“To figure out how to be really efficient across all those links and have them be highly utilized and to get the flows in those facilities working the right way, it takes time,” Jassy said. “So we're working very hard on it.” The work continues into 2023.
Amazon also made cost-cutting moves in other areas “where we didn't have conviction that they were going to be big needle movers for Amazon,” Jassy said. It pulled back on physical store expansion in areas including grocery, and closed 4-star bookstores. It pulled back development in devices. It ended fabric.com, Amazon Care, Amazon Glo and Amazon Explore. And finally, the company eliminated 18,000 roles.
“As we got into the early part of the summer, where we start our operating planning process…there was a lot of things happening in the macro economy. We started that process with the high-level tenet of we want to find a way to meaningfully streamline our costs in all of our businesses, not just their existing large businesses, but also in some of the investments we're making,” Jassy said.
The company thought about it this way: “We want to actually do a pretty good, thorough look about what we're investing and how much we think we need to, but doing so without having to give up our ability to invest in the key long-term strategic investments that we think could change broad customer experiences and change Amazon over time.”
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