Case study on e-commerce site reviews and ratings

Reviews and ratings are what hook us to buy a product. Every company in the e-commerce platform has understood the fact and has started to play with the notion of the buyer with feeded or  

Christmas is just around the corner; the best part about Christmas is the GIFTS. The delight of seeing our loved ones open our gifts can not be explained in words. The joy of choosing and buying gifts is unparallel. 

However, it is hard to choose gifts. So, we never tend to go on shopping sprees alone. Instead, we seek the opinions of the people we trust. Seeking others' opinions to choose the perfect gift always provides additional help. Online user reviews have taken up this supporting role in the digital era. Reviews show the mirror of digitally displayed products or services. 

However, with constructive technological advancements, few keep digging loopholes to exploit them. In our case, the loophole is the anonymity of the users who post these reviews. In the face of faith in the website, we tend to believe in anonymous reviews too.

Black hat companies have exploited this human tendency for a long time. Businesses pay millions to such companies to promote and escalate sales, and why not? A positive review could scale a business's conversion rate by 354%. This clearly shows the massive impact a positive review can make, and what better way to seek positive reviews than "buying" them? 

They are creating fake users to undertake the platform process or trying existing users to post positive reviews. There is an ocean of manually/robot-generated fake reviews online. These deceiving reviews cheat people and have been a significant cause of commotion among consumers.

In the face of disparity, the Government of India has devised a policy to curb the issue.

Let us look into the details of this Policy and why this Policy was needed. Then, we would further look into the trends that have led to the Policy.

What the new Policy says:

India adds a page in history as it becomes the first nation to act against fake reviews online, asking e-commerce platforms to voluntarily reveal solicited or paid reviews. The new Policy will also include disclosing the methods of Star ratings on online portals. The new government policy is prepared by BIS (Bureau of International Standards) and will be effective from 25th November.

• Paid Reviews posted online will be marked as "Paid."
• The Policy covers any platform that posts review online
• The policy will be applicable from 25th November
• Users and companies will not be able to change posted reviews
• Companies need to appoint dedicated facilities for monitoring the authenticity of online reviews
• Consumers, sellers and publishers will be well-identified with registered email IDs and mobile numbers.

When will the Policy be implemented: 25th November 2022.

As per the new framework of the government, all e-commerce businesses shall mention "paid" or "solicited" reviews online. The new Policy was drafted under the mutual agreement of Amazon, Tata Sons, Reliance, Swiggy, Flipkart, Zepto, Zomato, Meesho, Google and Meta.

The new Policy will include procedures for digital retail, hospitality, food and travel industries, along with all other e-commerce websites that publish consumer reviews. The plan is to seek voluntary acceptance from the businesses initially, but the policies will be made mandatory if they fail to comply. After implementation, neither users nor publishers could manipulate reviews once posted.

Why Policy is implemented:

Mass "advertising frauds" and "Paid-reviews" complaints are the drivers for implementing the new policy. Let us look into them in detail.

• Gemba on "Paid-Reviews":

Reviews are equally vital for businesses and consumers. With influencing 90% of user decisions worldwide, reviews make or break deals for businesses. 

Reviews boost the sales of the business, along with offering excellent advertising opportunities at the same time.

According to research, 82% of Americans check reviews before buying on Amazon. Still, to our surprise, about 61% of the reviews on electronic products have been deemed fake, and 93% of consumers state that their decisions are influenced by feedback. 

The illegal practices of fake reviews do not limit to the Retail industry. The practice has been prevalent in the Tech-ed industry too. As per the research by the Advertising standard council of India (ASCI), the education sector committed the most significant number of advertising frauds from 2021 to 2022.

To thrive in a competitive market and be aware of positive reviews' outcomes, businesses often turn to foul means like posting fake product reviews and even soliciting feedback. According to an article by Jonathan Marciano published in World Economic Forum, almost 4% of reviews on online platforms (including Amazon, Trip Advisor and Yelp) are fake, costing around 152 billion dollars.

In addition, businesses often employ companies or services to write "paid reviews". As a result, the chances of receiving positive feedback increase by 70%. Those are pretty good chances if you ask us! A business could pay around a dollar to even thousands of dollars for a review. This is the underlying reason for the massive development of the paid reviews market globally. Seeking reviews has become a prominent means of advertising. Some businesses, such as "Get Reviewed" thrive by providing paid review services for digital platforms.

• Advertising frauds:

Besides buying reviews, online platforms' other most popular technique to boost income is via - "sales" and offering the same product at a discounted price. Slashing item prices from conventional Retail Prices is a fruitful way of attracting traffic. The technique has been widely adopted by almost every online platform. 

In digital retail platforms such as Amazon, during "sales", products of only selected sellers are showcased, who often do not even hold any inventory of the item but collect it from manufacturers. Moreover, such sellers are often timing the subsidiaries of the business, which source products from sellers in bulk and sell them for slashed prices to the customers. Now you might think, what is the issue with this? The seemingly win-win situation for businesses and consumers drastically impacts local and domestic sellers.

In the past year, the Ministry of consumer affairs released norms to curb the issue after registering enormous complaints and widespread anger among offline retailers. Along with imposing a ban on "flash sales", Policy also forbid online retailers to shoe their subsidiaries and related businesses as sellers on the digital platform. The policy-imposed ban on "flash sales" was widely opposed by almost 72% of consumers. 

What do businesses say about the Policy:

The Policy has been devised in the presence of significant e-commerce giants. From Amazon, Meta and Google to Zepta, Zomato and Meesho, the Policy was devised after mutual consent from BIS and eCommerce platforms. So, it would be safe to say that the business agrees with the framework. However, the honest answer would only be revealed post-implementation.

Legal Repercussions: what will happen if businesses fail to comply:

The Ministry of consumers affairs has "suggested" the proposed changes. It is voluntary for businesses to comply. The idea is to observe the response of companies to the Policy. After ---- days of implementation, the government will further decide whether to mandate the Policy. 

However, post-compulsory compliance with the Policy, fraudulent businesses will be legally bound to follow under the consumer protection Act.

Where can consumers seek help:

After the policies are made mandatory, consumers can register official complaints against misleading reviews. All the grievances can be registered on the:

National consumer helpline: (1915), (1800-11-4000)

Consumer Commission: www.consumerhelpline.gov.in.

CCPA: 1-866-467-8688