Tuesday, July 12, 2016

Amazon’s Chinese Counterfeit Problem Is Getting Worse

Ari Levy (via John Gordon and John Gruber):

In May, CNBC.com reported on a Facebook group, now consisting of over 600 people, whose members have seen their designs for t-shirts, coffee mugs and iPhone cases show up on Amazon at a fraction of the price of the originals. The designers described it as a game of whack-a-mole, where fakes pop up more quickly than they’re taken down.


To unsuspecting consumers, fake products can appear legitimate because of the Fulfillment by Amazon program, which lets manufacturers send their goods to Amazon’s fulfillment centers and hand over a bigger commission, gaining the stamp of approval that comes with an FBA tag.


Making matters worse, when buyers unhappy with the cheaper alternatives leave a bad review, it drags down Bergman’s standing because the reviews are all thrown together.


As a marketplace, Amazon isn’t legally responsible for keeping counterfeit material off the site as long as it responds to complaints and takes action when it’s brought to the company’s attention.

Amazon faces a sort of strategy tax.

Update (2016-07-21): Ari Levy (via John Gruber):

Birkenstock is walking away from Amazon.com.

Plagued by counterfeits and unauthorized selling on the online shopping site, the sandals company will no longer supply products to Amazon in the U.S. starting Jan. 1. Additionally, Birkenstock won’t authorize third-party merchants to sell on the site, according to a letter the company sent to several thousand retail partners on July 5.


The only way to get Amazon’s support in creating a clean environment, according to Kahan, is by selling the entire catalog to Amazon. It’s part of the online retailer’s effort to be the one-stop shop for anything and everything.


Birkenstock will be telling consumers to purchase only from authorized retailers, and that any products listed on Amazon can’t be trusted. “So, buyer beware,” he wrote.

Update (2016-08-19): Nick Heer:

It’s not just counterfeit goods on Amazon that are a problem for legitimate businesses. Jason Feifer writes for Entrepreneur magazine on a new scheme that marries Amazon’s generally low prices and dubious eBay sellers[…]

6 Comments RSS · Twitter

Is this really a huge problem for Amazon? On some level, counterfeit products might be good for Amazon. It means that they'll have cheaper prices than competitors who sell originals, they're not legally liable, and most people probably don't care, or can't tell the difference.

Arguably, selling counterfeit products might be part of the business plan for some of Amazon's largest competitors, so Amazon might not be too unhappy about it. The only people who really suffer are the legitimate sellers.

@Lukas So far, I don’t think so, but I guess we’ll see. Seems to me that some customers do care because they unexpectedly get poor quality products. And it could hurt Amazon’s reputation—and eventually sales—if the perception grows that you can’t be sure of the quality when buying from them. On the other hand, there are certainly reasons Amazon might actually like this.

Yup. It works well for Amazon unless they suffer significant reputation damage over time.

Consumer trust, (on a wide variety of fronts), is a crucial element of Amazon's secret sauce.

In this context, I think it's worth noting that, on the whole, counterfeit products seem to be getting better.

When I bought GBA games on eBay in the 2000s, it was painfully obvious when I received a counterfeit one. The labels were printed horribly and barely stuck to the games, the manuals were obviously xeroxed, the cardboard cases were printed at an angle, the clearance between the different plastic pieces of the cartridge was inconsistent, and the batteries died after a few months. These things barely worked.

A few months ago, a friend of mine ordered a DS game, and got a counterfeit. When I saw it, it did seem kind of off, but it was not immediately identifiable as a counterfeit, and it worked just fine. I really had to compare it to an original to be completely sure that it truly was a copy.

I think counterfeits are now - on the whole - good enough that most people can't tell the difference between (to pick something that often seems to be copied) a genuine pair of beats, and a copy. Presumably, they're not buying beats for their amazing sound quality anyways :-)

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