A Chinese online retailer, stung by revelations of sales of fake watches on its site this summer, is taking additional steps to prevent the sale of counterfeit goods on its web marketplace.
Chen Ou, CEO of Jumei.com, has requested that all suppliers add anti-counterfeiting code to their products to prevent the sale of phony goods. He says he will also buy more goods directly from well-known Western brands to prevent intermediaries from selling counterfeit goods on Jumei.com.
The moves come in the wake of broadly reported stories in China’s media about a Chinese merchant that sold many fake watches on several Chinese marketplaces, including that of JD.com, No. 1 in the Internet Retailer China 500. and Jumei.com. The offending merchant was identified as Xiang Peng Heng Ye.
This news hit Jumei.com hard. The company, which specializes in selling cosmetics but also allows outside merchants to sell a wide variety of products on Jumei.com, suffered a more than 50% decline in its stock price following the revelations this summer. The e-retailer’s parent company, Jumei International Holding Ltd. went public in May on the New York Stock Exchange, raising about $245 million. In addition, five U.S. law firms have filed lawsuits against Jumei.com over the sale of counterfeit goods.
Jumei.com, No. 11 in the Internet Retailer China 500, admitted that the goods were phony and subsequently shut down the section of its online marketplace that was selling luxury products. Chen says before Jumei.com only allowed sales on Jumei.com by merchants already selling on large Chinese marketplaces but now recognizes that’s not a guarantee of a seller’s integrity. About 50% of sales on Jumei.com are by marketplace sellers, the company says.
Chen says he has requested all suppliers add anti-counterfeiting codes on every product so that consumers can go online to check the authenticity of products they buy. Many brands, such as Elizabeth Arden and Japanese cosmetics brand Shiseido, have done that or plan to, according to Jumei.com. What’s more, Chen says Jumei will buy more products directly from overseas brands so that there is no question about their authenticity.
Jumei.com plans to add more imported products in the future. Consumers could buy authentic products since Jumei.com says it will procure more products from overseas directly.
Jumei says its sales of imported products have doubled this year. In part that’s because of China introducing free trade zones that make it much easier to get imported goods through customs.
Allegations of sales of counterfeit goods have dogged Chinese online marketplaces, particularly the largest operator of such portals, Alibaba Group Holding Ltd, which operates Taoboa.com for small sellers and Tmall.com for larger brands. “Tmall.com is relative clean, but Taobao.com still has many counterfeit,” says Haydn Simpson, product director, brand protection, for U.K- based brand protection firm NetNames. “Some international brands estimate that up to 80% of listings for their products on Taobao.com are fakes.”
Simpson says anti-counterfeiting codes are a good step, but that Chinese marketplace operators could do a better job of making it easy for brands to report violations.
An Alibaba spokeswoman says the company has removed about 114 million products suspected of being fakes from Taobao.com during the first ten months of 2013, a 31% up compared with the number of take-downs in the full year of 2012.
“We work hard to eliminate products from our marketplaces that violate intellectual property laws,” she says. “We continue to collaborate with intellectual property owners and sellers to remove products that violate our strict policies.”
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