Back when Amazon served primarily as a mediator between brands selling their products and consumers, it established a self-run service called Vine, which sought to limit the direct contact between those brands and consumers they might solicit for reviews. The idea was that by putting Amazon in the middle, the chances that brands could offer free products in return for better reviews would diminish.
But the role of Amazon has changed remarkably, not least in that it now sells a vast range of private-label products under
its own brand. Thus, Amazon is competing with other brands, and critics allege that by continuing to run the Vine program, it is granting its brands an unfair advantage, because it does just what Vine was intended to prevent: offer free products in return for glowing reviews.
Although Amazon does not require or mandate positive reviews for the free products it makes available to verified reviewers, a sense of reciprocity or gratitude likely pushes people to offer better assessments. In addition, because it polices itself, there are few constraints on how widely and often Amazon leverages its position to benefit sales of its private-label products.
Vine reviewers are not limited in how many products they can receive and review, so for example, one consumer received and reviewed 40 products in a single day. Analyses of the reviews affirm that the ones for Amazon-branded products tend to be positive and generic, whereas reviews of competitors’ products, not promoted through Vine, often are more diverse but also more detailed and specific.
However, the content of various reviews often has less impact on buyers than the aggregated, average ratings. Therefore, if Amazon can prompt hundreds of 5-star ratings, its products likely enjoy a sales advantage over other brands that lack the same access to reviewers.
Complaints by sellers on the site have raised some investigations by European authorities, seeking to determine if Amazon is engaging in antitrust violations. The retailer insists it is not, because other sellers still can participate in the Vine program if they so choose. Furthermore, an antitrust suit might be difficult to establish, considering that the prices Amazon charges for its private-label merchandise often are lower than those demanded by name brands, so consumers are not being harmed in this sense.
1. Is Amazon preventing or limiting competition by pushing its own private-label brands?
2. Visit Amazon and consider a product category in which it offers a private-label option. Are the reviews better or worse than for a competing name brand offering?
Source: “Amazon Doles Out Freebies to Juice Sales of Its Own Private-Label Products,” Advertising Age, October 16, 2018