Worse than useless.
Even a simple change like adding a "show only items with a minumum of X reviews" would be a godsend.
If Amazon ranked it's items the "proper" way, such that all one-rating products were far from the top, I imagine it would see a lot more clustering of purchases on the most popular version of every product type. All those variations that were not as popular would receive many fewer purchases, and some of those vendors might simply fold.
Amazon may have decided that having a larger ecosystem of vendors is worth more than implementing a better rating system. This, presumably, is not in the customer's interest (unless perhaps the "discoverability" of unknown products is on balance worth the risk).
Whatever the reason, Amazon certainly knows about other ranking systems, so it has to have made this choice deliberately.
don't you think if they switched to this algorithm you would see page after page of cheap crap with 500 5-star reviews each from the 500 resident fake reviewers?
...though now that I've written it like that it does make it obvious that this would be higher a burden on fakers, and cut out some of the products doing this.
It helped me to push chinese crap way below the fold and focus on well-researched items on top.
I loved it, but I noticed that not too long after (maybe a year?) they removed it. My sense was that small businesses were complaining that the system was unfairly benefiting larger businesses. E.g., if you have a new product, using the lower bound or something similar is unfair because it penalizes you for being new, relative to established players.
Honestly, I can see that perspective too (which is missing from the linked piece), and am not really sure what to do about it. The linked piece comes at it from the perspective of consumer risk minimization, and not from the perspective of the producer, which Amazon also has to contend with.
The solution is probably to allow sorting by both.
Nevertheless I stand by my original remark. IMHO the conflation of "Chinese" with "cheap crap" is:
* Not relevant
* Debatable / Subjective
* Divisive
China today makes the lion's share of cheap crap. Before that it was Korea. Before that it was Japan. Next will probably be Bangladesh. Just follow where garment manufacturers go and you'll see the pattern.
They key to selling more cheap crap in this day and age is to game the ratings systems as inexpensively as possible, thus the Amazon one-fake-5-star-review problem.