Groupon says its focus is on the bottom line, rather than top-line growth.
The company buried mammoth rate increase notices in marketing e-mails, retailers say.
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.