>>Michael H Keller and Taylor Lorenz, The New York Times
Published: 2020-03-25 18:39:50 BdST
New e-commerce sites that use the company’s services are filled with wildly exaggerated claims about virus-fighting products that may not even exist.
The New York Times analysed registrations with the company, Shopify, which allows just about anyone with an email address and a credit card to create retail websites in short order. The company, which in the past helped build such successful e-commerce sites as Kylie Cosmetics, the $1.2 billion beauty brand founded by Kylie Jenner, has registered nearly 500 new sites over the past two months with names that include “corona” or “covid,” The Times found. Untold others have been started using other names.
One of the new sites marketed an “oxygen concentration” machine for $3,080. Another had the “Corona Necklace Air Purifier,” which for $59 claimed to provide “All Day Protection.” A third offered a $299 pill that promised “Anti-Viral Protection” for 30 days. And sites such as CoronavirusGetHelp.com and test-for-covid19.com marketed home test kits for $29.99 to $79, none of which have been approved by the Food and Drug Administration.
Many of the sellers do not actually possess the goods, nor have they verified that the products are legitimate. Often, the sites’ operators are middlemen who fulfill customers’ orders by buying items on other websites — a kind of digital arbitrage known as “dropshipping.” Shopify is attractive to these new businesses because its software can integrate the sites with the distant vendors, mostly in China.
Amy Hufft, a Shopify spokeswoman, said the company last week closed more than 4,500 sites related to the virus. She said sites that did not back up the medical claims they made were suspended from the platform. By Monday, nearly all the sites identified by The Times had been removed.
“Our teams continue to actively review COVID-19 related products and businesses, and stores that violate our policies will be immediately taken down,” she said in an email.
Gibril Bachouchi, a 20-year-old Canadian engineering student in Algiers, told The Times in a video call how he started his Shopify site, killcoronavirus19.com.
Bachouchi said he created the store to raise money for a hospital where his aunt works as a doctor, after hearing it was short on face masks and other equipment. His site advertised the $3,080 oxygen machine last week, and a COVID-19 testing kit for $30.40, among other products.
“I was just like, ‘I’m a 20-year-old kid — what can I do to help a bit?’” Bachouchi said.
He watched videos on how to start a Shopify business, he said, and used the Shopify platform to log in to AliExpress, a Chinese retail site similar to eBay. He selected the oxygen concentrator and the testing kit from the Chinese site because they were among the “hottest-selling items,” he said. “You click a product you like on AliExpress and then it’s just on your website.”
Bachouchi said he used Shopify’s algorithm to set competitive prices and choose a markup; he said he chose 10%, though other resellers were typically charging 25% to 33%. As of last week, he had made no sales.
“Shopify pushes you to spend as much as you can on marketing,” Bachouchi said. “I just don’t have the money.”
A spokesman for Alibaba, the owner of AliExpress, said that medical testing kits were previously allowed under their policy “but given the current environment, we have made the decision to prohibit suppliers from listing COVID-19 testing kits.”
Mike Schmidt, founder of the digital marketing platform Dovetale, said the Shopify sites were emblematic of both the ease and the risks of setting up an e-commerce business. “It becomes much more accessible to sell things around COVID,” he said, cautioning that “there’s no verification label on these stores. There’s no one saying this is a trusted supplier.”
Though Shopify has been policing the new sites, it also encourages its customers to go into the dropshipping business. It offers a guide for starting such a business and makes money from them by charging a monthly fee and a percentage of sales. The Canadian company is one of the largest turnkey e-commerce sites in the world, bringing in $1.5 billion last year. In February, Shopify announced that it had hosted over 1 million businesses.
New sites selling coronavirus products come online every day. A majority of the sites tracked by The Times appeared over the past two weeks, including over 70 registered since Wednesday, according to data from DomainTools, a cyberforensics company. The sites target users around the world and are in English, French, Spanish, German, Romanian, Icelandic and other languages.
The registrations are part of a larger increase in Coronavirus-related activity, said Chad Anderson, senior security researcher at DomainTools. In February, he said, he saw about 100 new websites a day related to the pandemic. Now, the figure is 2,000. Their systems have flagged about half of those as likely related to malware, ransomware or phishing.
“It’s a massive uptick,” Anderson said.
The operator of another Shopify dropshipping site, covid-defender.com, who would identify himself to The Times only as Radwan, said he lived in Denmark and had run Facebook ads for his site. The site sells face masks for $30 to $40, including one marketed for children described as “Kid Mask Protection Against Virus and Bacteria With N95 Standards.”
He said he believed the supplier’s statements that the masks were certified to the standards claimed. “It doesn’t say by any means that it provides 100% protection,” he said.
He said he had not heard of shortages of the masks he sold. “If I had heard of any shortage anywhere on the planet I would not sell it,” he said. Even so, he said, it was up to his customers to vet the products before buying.
“They shouldn’t trust these stores, and they have to find the proper information themselves,” he said.
Radwan’s and Bachouchi’s sites were among those that were no longer available as of Friday.
Like Radwan, many other Shopify sites were advertising on Facebook last week, as well as on Instagram, despite bans on such ads. The social platforms are lifelines for the shops, representing the primary way of generating sales. Similar ads have also appeared on Google, as CNBC reported.
The Facebook page “Coronavirus Test Kit” ran ads last week saying “Check whenever necessary at the comfort of your home! Protect yourself and your family.” It pointed to its website, which sold one blood test for $19.99 or 500 for $1,329.99. The site said, next to a photo of a blurry document, that the tests met certain European safety standards.
The Times found nine other Shopify sites that had run advertisements seeming to violate Facebook’s recently announced bans on price gouging and ads that create “a sense of urgency.” After The Times sent information to Facebook about the site selling COVID-19 testing kits, the company announced it was banning all such ads. In a statement, Rob Leathern, Facebook’s director of product management, said the ads The Times identified had been removed for policy violations and the company was “ramping up” its automated enforcement system.
But sellers are finding other ways to advertise.
One site, LuxuryWildSpot.com, which sells anti-coronavirus face masks, pays influencers to promote its pages on Instagram.
This can be cheaper than traditional ad buys — allowing posts to reach millions for as little as $30 — and also harder for the platform to police since they often appear as regular posts. And while Federal Trade Commission guidelines require accounts to identify sponsored content, these rules are often ignored.
Last week, posts showing videos of people convulsing, being wheeled into ambulances or being decontaminated appeared on at least four Instagram accounts as a part of a paid influencer campaign, according to screenshots of private messages showing payments to the influencers, some with over a million followers.
The posts promoted air purifiers and face masks on LuxuryWildSpot.com, and masks on n95security.com and SmartMasks.uk — where they were described at the top of the site as a “Smart Antiviral N95 Pollution Mask” and elsewhere in smaller type as an “Anti Dust Cycling Face Mask.”
One of the accounts removed the post after The Times asked about it; others that were still online were removed for policy violations on Monday after The Times flagged them to the company. On Tuesday, Instagram announced it was banning ads and branded content promoting “certain medical supplies, including face masks.” None of the sites responded to requests for comment.
Rafael Cintron, a dropshipper and marketing consultant who teaches the business on YouTube, said he wasn’t surprised that people were trying to profit from the crisis. But he advised staying away from selling these products.
“It’s not just supply and demand and connecting people,” he said. “It is really affecting the process of taking care of this pandemic and making sure that everybody goes back to their regular lives. That’s the real issue.”
© 2020 New York Times News Service