E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
(Page 2 of 3)
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.”