In the event you have not already heard the news Amazon is changing the rules for posting reviews on their site. This change is significant, immediate and tells us great deal about their strategy and ability to execute it in the real world.
What Happened…
Essentially Amazon is changing the way companies can get product reviews developed on items. They are essentially eliminating the ability to give product away in exchange for reviews outside of a controlled environment. You must now pay to leverage their platform called Vine to accomplish this.
While this seems relatively mundane, I see this as taking some very prudent strategic insights, building a clear plan and then executing quickly and decisively. Take note of the following two strategic insights and actions:
1 —Product Reviews Drive Search. The decision to modify the review process is about recognizing the changing consumer. The consumer is getting smart regarding the “quality” of reviews not simply the quantity of reviews offered.
2 —Dominate Product Search Drives Conversion. Amazon has done a great job of create review quantity. So good in fact consumers are increasingly bypassing Google and going straight to Amazon for their review. This means that not only do Amazon reviews dominate page 1 of Google, now the majority of product search is done explicitly within Amazon — meaning other eCommerce retailers product assortment and offers have less chance of being seen by the now majority of consumers looking for the product.
What are the implications…
Amazon has developed breadth and scale around Reviews and Search. This has produced a network effect in it’s own right whereby they now have enough users to begin to focus on the quality of product reviews that exist in a closed environment in a way no other retailer can do today. This model produces another point of value to the shopper or what I call the Amazon Value Loop.
Additionally this change is going to have a significant impact on new listings on Amazon. This will raise the cost of getting a large review base penalizing the items via A9. This is going to make it more difficult to build a quick, strong presence but will also probably reduce the associated churn of assortment also.
Looking at the eCommerce landscape now not only does every player have to fight to create traffic from search and reviews, now they are going to have to find a way to do this while being more selective about the quality of the reviews themselves and attract the attention of consumers never leaving the Amazon platform for search.
