Amazon is changing the formula that determines the ranking and display of product reviews. According to CNET, the approach includes a new machine-learning platform to surface newer and more helpful reviews. “The system will learn what reviews are most helpful to customers … and it improves over time,” Amazon spokeswoman Julie Law told CNET.

Background

As we’ve explored many, many times, Amazon can be both a friend and foe of small businesses. And it’s often difficult to tell when they are either. For instance, while it may seem counter-intuitive, newly announced changes in the way Amazon ranks and presents reviews can be good for businesses that may compete against Amazon.

Shopper reviews have been one of the most powerful competitive advantages Amazon has had over traditional brick and mortar retailers. Yet with small, local retailers, the knowledge of the staff can often out-rank the opinions of Amazon users. And, as we’ve explored before, there may even be some “common enemy” factors at play. Over the last 15 years, Amazon has provided an opportunity for local, independent retailers to compete against the big box chains.

Here are some reasons that better ranking and relevance to an individual user of Amazon may help a small retailer:

Amazon isn’t just a retailer, it’s a marketplace

One of the practices of Amazon that is perplexing to even savvy followers of the site is the way in which the website provides customers with the option to purchase products from its competitors. In some cases, it even sells the house brands of its competitors. It also serves as a fulfillment service (handling transactions and logistics, including warehousing, packing and shipping) for tens of thousands of businesses, both large and small.

Another way that it is a marketplace is the way in which it sells advertising to its competitors. As companies like Alibaba have shown, selling advertising is a high margin business model for a marketplace.

In other words, having more relevant and reliable reviews can help surface products for a customer who may end up purchasing it from a small business, without ever leaving the Amazon.com website.

Showrooming vs. Webrooming: Some customers use Amazon to research what they buy locally

Showrooming, the customer-practice of using a smart phone to check online prices while in a retail store, can have major negative effects on a small business if it takes place too often. However, there is research that suggests a high percentage of shoppers do the opposite: they use websites like Amazon.com to practice “webrooming,” doing research online and then purchasing the product in-store.

Uncovering fake reviews

Like Google’s efforts to stamp-out the types of SEO practices that are designed to fool its algorithms, Amazon’s new ranking approach is clearly designed, in part, to stamp out the fake reviews that are intended to game Amazon. Amazon, like Yelp, has even sued companies that promise to improve a product’s reviews.

Having honest reviews of products in the database of what has become one of the most influencial shopping tools the world knows, even when shoppers ultimately buy the products elsewhere, is beneficial to the marketplace for any product.

But Amazon is still the competition

But no matter how much the changes in ranking of reviews may help or hurt small businesses, it’s important to remember: Amazon is constantly moving into areas where it competes head-to-head with local, small businesses. And it is constantly looking for other ways to turn small businesses into customers.