Global sales of counterfeit and pirated goods are reported to have soared to as much as $509 billion in 2016, representing up to 3.3 percent of world trade, compared to 2.5 percent of global trade in 2013. This poses a major threat to economic growth and innovation.
According to the latest assessment by the EU Intellectual Property Office (EUIPO) and the OECD [Organization for Economic Cooperation and Development], footwear, clothing and leather goods topped the list of industries affected the most by counterfeit products. In fact, Red Point’s latest report on footwear shows that 32 percent of consumers were not confident they could identify fake shoes online, with 35 percent of respondents saying they had purchased fake footwear by accident in the past.
Meanwhile, the countries reported to have been affected the most by counterfeiting in 2016 included the United States, whose brands or patents were involved in 24% of the fake products seized, followed by France at 17%, Italy (15%), Switzerland (11%) and Germany (9%).
With ecommerce goods virtually immune to government regulations and third-party sellers accounting for 52 percent of all products sold on Amazon, it’s becoming harder for shoppers to spot fake products online. As a matter of fact, following increased public scrutiny earlier this year Amazon issued its first-ever warning about counterfeit products in its earnings report, reflecting increased concern over the problem.
Cracking Down on Counterfeits
Amazon’s Project Zero is the company’s second attempt to remove counterfeit listings from the Amazon marketplace and comes shortly after the company issued its first-ever warning about counterfeits in its earning report in February. But what does Project Zero really means for brands affected by the growing issue of online counterfeits?
While Project Zero will undoubtedly have utility for businesses trying to protect their brand value and sales on Amazon, counterfeiting is a systemic problem across ecommerce and is almost never confined to one marketplace. For example, in 2018 Amazon only accounted for 1.6% of all intellectual property infringements of our sportswear clients; the majority were found on other marketplaces and social media.
Though Amazon’s Project Zero empowers brands to automatically take down counterfeit listings, that may not be sufficient given the speed at which counterfeiters can produce and advertise fakes online. Unless the system offers such actionable data as the counterfeiter’s geo-location, seller trends and patterns, or repeat infringers’ information to help improve companies’ IP strategy it will quickly start to feel like an endless game of whack-a-mole.
Beyond Takedown, Take Control
As businesses continue to face increased pressure to tackle the growing issue of online counterfeits, Amazon Project Zero will be a useful tool to complement companies’ brand protection strategy. However, counterfeiters are a resourceful and agile group able to respond to new challenges relatively quickly. In our experience, when policing methods improve, counterfeiters migrate their sales and marketing operations to other platforms. That makes it critical for businesses to leverage data-driven brand intelligence platforms to gain full visibility of their brand presence across all channels and online locations.
Ultimately, maintaining brand value involves much more than controlling one platform, it requires the involvement of various stakeholders, including distributors and online sellers, the control of images and content, and, obviously, the removal of counterfeits. Whilst Amazon Project Zero brings businesses one step closer to protecting their online assets, it only scratches the surface of the complex online brand protection crisis.
Based in Barcelona, Red Points provides technology for combating online counterfeit sales and trademark infringement.