Competitive Sabotage in Online Business: What to Look For and How to Protect Your Company
While I've observed this at eBay, the problem is far worse on eBay's competitors' websites (like Amazon for example - which is the main reason we do not sell there), it is not an uncommon practice for some unscrupulous sellers to engage in a tactic known as competitive sabotage as a means of preventing a new entrant into the marketplace from becoming established.
What they do is create faux accounts from which they make one or two legitimate purchases of items they most likely would buy anyway in order to establish some measure of credibility with the account. Then, they buy something from a competitor and either attempt to cancel the transaction after it has already shipped, or find something wrong with it and demand a refund. Of course, they also demand that the seller pay for the return-shipment, and even if the seller agrees to all of this they'll leave negative feedback (of a negative Seller Review, as is the case with the other marketplace mentioned above).
It's a catch-22 for the legit seller. Even if you adhere to their unreasonable demands, you lose money by paying for not one but two shipments, not to mention the time required to process the order, prepare the shipment and deal with all the emails exchanged between parties. Then you've got the negative feedback/review to deal with.
If you stand on principle and fight back their attempts at bullying you out of the marketplace, it gives them the ability to create doubt as to which party is really the nefarious one.
"What should have been a simple return turned into a nightmare..."
If they're really sinister (we're talking complete sociopaths, but in business one must be prepared to not only encounter but deal with people like this - both in the form of customers and competitors), they'll badmouth you all over the web at every third-party business directory, review site and so forth.
The best way to fight back is to keep meticulous records so that you can win the chargeback dispute should you decide to refuse the refund request, which is highly advisable that refund requests (they're really more like demands) from suspected competitors be refused. Otherwise, they'll bleed you dry with them, taking up all of your (or your employees') time dealing with preparing their orders, replying to the emails, processing returns/refunds, etc.
Also, make sure your online store has a blog to accompany it. A blog is a great way to get your company's name out there, and provides a forum whereby you can control the content and the nature thereof. You may even want to consider having more than one blog.
My company has two blogs:
- The first is a company and medical equipment industry news blog
- A blog focusing on our diverse assortment of products, which entail everything from home medical equipment and supplies to maternity care products to vitamins and nutritional supplements.
If you're a small business, the resources simply aren't there to continuously absorb those blows (shipping fees do add up, as does the human capital which could otherwise be used to grow your business). Additionally, they want you to issue the refund, and by doing so you're enabling and encouraging them to continue the fraudulent activity.
To fight competitive sabotage, here's what to do:
- Learn how to identify it when it occurs.
- Don't allow the competitor to bleed you dry: Don't give in to their demands for refunds, returns, postage and time spent dealing with them. All of this costs you money - money that your company needs in order to meet financial goals on time.
- Get good at managing your own reputation online: If this requires hiring an SEO / Reputation Management firm, be sure to properly vet them and make sure they abide by Google's Webmaster Guidelines in doing so. This applies as well if the reputation management / SEO is done in-house as well. Never engage in anything considered to be "black hat" in terms of tactical procedures.
- Open an eBay account and preferably also an eBay Store: eBay is generally pretty good at weeding out those members who engage in such tactics as those described herein. If our company were to be the victim of competitive sabotage and defamation (we've dealt with it in the past), all we'd have to do is point to our eBay feedback score of 99+ percent customer satisfaction in order to establish that either the bad review was at worst an aberration, or more likely the product of a sabotage campaign.
- Actively monitor your own reputation: When they post negative reviews, if the site allows the seller to respond, do so and make clear that the review was written by a competitor. If the site does not allow seller responses to negative reviews, ask your legitimate customers to go to the site(s) at which the review(s) were written and counter them with reviews written by real customers. Don't ask for a favorable review. Simply request that they be totally honest, and if you're good at what you do the customer will write a review that reflects well on your company. Enough positive reviews eventually will make the negative one appear to be awfully suspicious.
- Create (or claim) a profile at every third-party business directory available: Pay for featured placement at those in which doing so creates additional links to your profile from within the same site, thereby increasing the strength of the profile as it pertains to search. For every such profile you create, you get one more web page that is under your control that can appear within the first or second page of search results whenever someone runs a search for your company. Ideally, you'll have control of every page customers can conveniently find should they search for information about your company (sure, they'll be able to find the negative stuff if they spend enough time looking, but they'd have to be specifically looking hard for something negative associated with your company name in order to find the reviews written by competitors).
- Don't let them get to you: If you become discouraged because your company's name is being unfairly ruined by competitors deliberately seeking to crush you while you're still small enough to do so, ultimately they will succeed.
- Make a decision to stay the course and endure: Sure, it is extremely frustrating to have to deal with, but in this era of global commerce conducted online via the internet, one must be prepared to stare adversity right in the eyes and refuse the temptation to blink.
- Put it into perspective: The fact that your competition has dedicated an employee to harassing your business by placing fake orders with a refund demand (and possibly provoking a response that legitimizes a bad review in the minds of objective readers) being the whole point of the order is ultimately a compliment to your efforts thus far. They wouldn't be devoting time, energy and resources to damaging your business if they didn't genuinely believe that your company poses a legitimate threat to their own status within the industry and within the marketplace in the long-term. Keep that in mind, and use that as a means of remaining positive throughout the ordeal.
- Remember that this too shall pass: Remember that their efforts to destroy you are costing them money too in the form of human capital. However, since they're presumably larger and more established, they can afford to take the short-term blow if it means preventing a new entrant from becoming an established competitor long-term. That said, they can only get away with doing this for so long. If it doesn't work after enough tries, they'll eventually have to give up. Don't assume that your business will have to deal with issues like this forever. It won't. Make clear to the competitor in your dealings with the "customers" placing the fake orders that you're here to stay, and ultimately if you play your cards right they're the ones that lose the money (by having to pay retail costs for products they presumably sell and by wasting employee time attacking a company strong enough to endure the assault.