1/09/13

Small web retailers fume at ResellerRatings’ price hikes

The company buried mammoth rate increase notices in marketing e-mails, retailers say.

Amy Dusto , Associate Editor

Small retailer MainPerformancePC.com sells custom computers and gaming systems and has a staff of three. With hardly any advertising budget, the e-retailer relies on word of mouth and online reviews to draw in customers, says owner Michael Main. Until early December, he used technology and services from company ResellerRatings to solicit good reviews from customers at checkout and also to respond to or flag negative reviews about his business, which both help to improve rankings in Google natural search results, he says. ResellerRatings syndicates its reviews to the search engine so that those posted on ResellerRatings.com influence Google search rankings and merchant ratings.

But Main quit the service after what he calls multiple battles since 2010 over unfair and poorly communicated price increases. Within two days of cancelling with ResellerRatings, half of the roughly 80 reviews MainPerformancePC.com had accumulated since signing up—most of which were positive—disappeared, he says, causing the retailer to begin dropping off the first page of Google’s search results.

Google says it calculates seller ratings on Google Shopping with a variety of factors, including how representative and high-quality reviews are, not just the raw number of reviews, a spokeswoman says. The company does not comment on third parties’ business models, she says. 

Elaine Olshanetsky, head of business development at ResellerRatings, told Internet Retailer that the company’s cancellation policy is to disable any reviews that a retailer actively solicited, collected and hosted on the retailer’s web site via a pop-up box provided by ResellerRatings. E-retailers can offer that pop-up box at the end of their checkout process. But, any reviews that consumers write about that merchant without prompting—that is, a shopper goes directly to ResellerRatings.com and leaves a review without using the pop-up box—are retained on the site, she says. That means that cancellation should not leave a retailer worse off in Google results relative to when it began using the service, she says.

Nonetheless, many merchants have complained on online forums and directly to Internet Retailer in recent months about ResellerRatings.com’s practices. And the company recently informed Internet Retailer that it had changed its policies and would no longer delete reviews about merchants that had canceled their service.

Some retailers, such as Fat Brain Toys, a family-owned toy e-retailer with 40 employees, rave about the services of ResellerRatings. “The Merchant Member program is very turnkey and easy to launch. Provided you’re already taking care of your customers, it’s a great way to let the world know about it,” says Mark Carson, founder of Fat Brain Toys. “It’s a vote of confidence for us that Google would trust ResellerRatings as an authentic third party that can be managing the customer perception.”

Jose Prendes, CEO of wellness and beauty products seller PureFormulas.com, which will have 2012 sales of $30 million, says ResellerRatings is the best of the four reviews services it uses—the others are BizRate, Nextag and Pricegrabber. He says this is because the ResellerRatings interface is easier to use and he receives instant e-mails every time a new review posts to his company’s profile, with the ability to respond, see the corresponding order number and flag inappropriate or false reviews.

PureFormulas.com signed up with ResellerRatings two years ago at a rate of $249 per month and since August 2011 has been paying $499 per month, he says. Prendes thinks the rate is fair both because it is much cheaper than the other reviews services he uses and, while the price doubled, his business has also grown by 100% in the last year, he says.

“You have to put it in context,” Prendes says. “If it’s a really small operation, it would probably affect them more and they might feel they can’t afford it. For us, it’s a great way of staying in touch with customers.”

At least nine merchants, though, shared complaints similar to Main’s with Internet Retailer, and many more echoed their negative words in an online forum. The latter group includes 60 retailers in a Google forum called Google Merchant Center that posted under the subject, “Reseller ratings has 10x's their merchant member fees since getting into Google review syndication. (sic) Extortion?”

Main says he started using ResellerRatings at a $29 per month rate. (ResellerRatings says it stopped offering that rate in the fall of 2011, raising its lowest rate to $99 per month.) A year later, in 2011, he received an e-mail from the company that looked like a typical marketing message, with news, product updates and the like. But, he says, “In the bottom was a short little blurb saying the rate would go from $29 per month to $899 per month.” He e-mailed his objections to ResellerRatings, saying he couldn’t afford the new price, and the company renewed his subscription at $29 per month, he says.

Another year later though, on Nov. 24, 2012, Main received a similar e-mail, this time with a 273-word notice at the end of the message saying his rate would increase to $499 per month, following two notices about the availability of new product and Facebook page reviews. He says he exchanged e-mails with a customer service representative, informing ResellerRatings that the most he could afford was $59 per month. This time, ResellerRatings wouldn’t budge on the price, he says. So, on Dec. 12, he cancelled the service.

While ResellerRatings declines to comment on prices offered to specific merchants, Olshanetsky says, “In certain instances, our customers remained at the legacy $29 per month rate for quite some time. Instead of raising their rates substantially, we implemented a stepwise process where we evaluated each merchant to determine an appropriate increase, and then implemented those increases over time.”

Main says he now is testing another reviews company, Shopper Approved, hoping to restore MainPerformancePC.com’s Google ratings and search presence. Shopper Approved starts at $19.95 per month for up to 250 ratings and reviews, and increases in tiers to a maximum of $99.95 per month for unlimited reviews.

Although ResellerRatings would not disclose its exact pricing tiers, Olshanetsky says it periodically reviews factors such as market conditions and information specific to a retailer, like annual revenue, to tailor an individual quote for that business. The average rate increase is two to three times the previous one and a significantly higher increase is unusual, she adds, without providing details about the number or frequency of rate changes. The company has more than 2,000 merchant customers and a 93% monthly retention rate, she says.

“It is not our intent or practice to onboard a retailer at a low rate only to significantly and arbitrarily increase the rate later,” Olshanetsky says. “It is always our goal to offer truly small merchants low rates and higher rates for larger merchants, since larger merchants benefit more in terms of uplift in absolute revenues from our services than small merchants do.”

One e-retailer, digital games, software and gift cards seller PC Game Supply, had trouble finding ResellerRatings’ policy details in the terms of service, however, and also struggled with the impact of lost reviews when it finally cancelled, says CEO Chris Letendre. He watched his rates increase in one year from $29 per month to $199 per month to $1,499 per month, he says. After the first increase, which he’d negotiated down from $299 per month, he asked for a contract but was told not to worry because his rate would not go up again, he says.  After the second increase, he was unable to negotiate a lower rate and, fed up, he cancelled the service.

“By the time the cancellation was completed, our profile had accumulated 2,400 reviews, and over 98% of reviews were positive,” Letendre says. “Since we had so many good reviews, I was not worried that the profile would get filled with negative content.”

However, he says a week later, just six reviews remained on PC Game Supply’s ResellerRatings profile: two positive and four negative. “The reviews left behind seem to be hand picked, some of them stating our company was a scam,” he says. When he asked about the deletions, the company told him it removed reviews that PC Game Supply solicited through the ResellerRatings submission form attached to his site’s checkout, though the retailer was not soliciting reviews at all, he says.

“I could not find anywhere on the web site or terms of service stating that if you were a non-member all reviews would be deleted,” he says. The ones submitted voluntarily by consumers via the ResellerRatings web site should have remained—46 reviews came in that way in the month after his cancellation, he says. “Since [PC Game Supply’s ResellerRatings] profile was displayed right underneath our brand in searches, our customers could still find the profile and they were leaving reviews,” he says. “We ended up paying ResellerRatings over $2,000 in a one-year period and we ended up with nothing to show for the money spent.”

ANS Xtreme Performance, which operates three e-commerce sites selling more than $20 million of paintball and recreational sporting gear, also left ResellerRatings in the last few months, says Bill Wise, purchasing director at ANS. In more than three years using the service, the retailer accumulated 1,000 reviews and agreed to one price hike from $29 per month to about $250 per month, he says. Around September, he missed a ResellerRatings e-mail notice stating that his rates would increase to $1,499 per month, saw the charge on his credit card statement, disputed it unsuccessfully and quit the service, he says.

What most upset Wise, though, came later. ResellerRatings didn’t take down his reviews right away. Rather, a month before Black Friday, on Oct. 24, he received an e-mail from the company stating that all his solicited reviews would disappear unless he reactivated the account, he says. ResellerRatings offered a 30% discount on the $1,499 reactivation price in the message. “It’s really scammy sales tactics,” he says.

Wise had already signed up with another service, Shopper Approved, he says, and in a month in a half built up enough reviews to replace those solicited over multiple years with ResellerRatings, he says. “But if I didn’t do this, I’d be screwed,” he says. Customers buy items from the retailer based on good reviews, he says. “I think at this point most people type in for a review before they make a purchase from a random web site.”

While Main, Letendre and Wise all quit ResellerRatings after price increases, another merchant, who prefers to stay anonymous but says it is small, with a staff of just 20, decided the impact of cancelling and losing its reviews on Google would be too harmful for the business to handle, says a project manager for the retailer. In 2010, after ResellerRatings first increased its quote from $29 per month to $99 per month, the retailer tried quitting the service, but within 48 hours it had lost enough reviews for its Google ratings to drop from four to two stars, he says. Though he declines to share specific values, the resulting sales losses were dramatic enough that the store’s owner said they must reinstate the service, he says.

When the manager noticed in the following year that the price had gone up a second time, from $99 per month to $499 per month, he says he tried to argue the bill, but the best he could negotiate was $349 per month. “Right now we literally pay them to keep a good rating on the web site,” he says.  After investing so much in ResellerRatings and being such a small retailer, he says the business cannot afford to switch to any other service for the time being. “Our ratings will take such a dive, we have to keep paying or else when people search on Google they’ll see three out of 10 stars and bad reviews,” he says. “We’re trapped. It’s insane.”

He adds that “their customer service is lousy, you can’t get anyone on the phone, e-mail replies take days and, the worst part is, even if you’re a customer there for 10 years, at the end all that service is in vain. You get nothing out of it.”

On Jan. 7, about an hour after Internet Retailer shared retailers' specific complaints with ResellerRatings, Letendre of PC Game Supply sent an e-mail to the publication that reads:

“In the last 24 hours it appears ResellerRatings has restored 892 of the reviews to our profile … When we canceled our membership we had collected aprox 2200-2400 reviews, so they did not restore them all, but they did restore many of them. Not sure why all of a sudden they have decided to restore our companies reviews (sic).”

Letendre added later that he noticed the change that evening, about two hours after Internet Retailer’s message to ResellerRatings.

On Jan. 8, ResellerRatings informed Internet Retailer via e-mail that its policies have changed. “As of January 2013, when a merchant ends their subscription, previously solicited reviews and any organic reviews from merchant members will remain; however, the retailer can't solicit reviews from that point onward,” Olshanetsky says.

Two retailers in the Internet Retailer Top 500 Guide and eight retailers in the Second 500 Guide report using ResellerRatings’ services to manage consumer reviews.

Topics:

ANS Xtreme Performance, Bill Wise, Chris Letendre, client contracts, customer reviews, e-commerce, Elaine Olshanetsky, Fat Brain Toys, Google, Google Merchant Center, Google review syndication, Jose Prendes, MainPerformancePC.com, Mark Carson, Michael Main, PC Game Supply, price hikes, PureFormulas.com, ratings and reviews, ResellerRatings, search marketing, search rankings, Shopper Approved, small retailers, web-only retailers

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