Unauthorized or rogue sellers and counterfeiters gaming the Amazon system is well documented. In 2018 and again in 2019, Amazon made the American Apparel & Footwear Association (AAFA) Notorious Markets list of foreign domains that purportedly engage in and facilitate substantial copyright piracy and trademark counterfeiting. The AAFA encouraged the Office of the U.S. Trade Representative (USTR) to expand future reports to include domestic marketplaces.
Kunal Chopra, CEO at etailz Inc.
While Amazon is taking steps to curb its counterfeit problem, the issue is not going away and the damage to victims—brands, third-party sellers and consumers— continues. A 2018 U.S. Government Accountability Office study found that 20 of 47 items the GAO purchased from third-party sellers on popular consumer websites were fakes. The Global Brand Counterfeiting Report, 2018 estimates that total counterfeiting globally reached $1.2 trillion USD in 2017 and is bound to reach $1.82 trillion USD by the year 2020.
Ecommerce platforms, online third-party marketplaces, and other third-party intermediaries such as customs brokers and express consignment carriers must take a more active role in monitoring, detecting, and preventing trafficking in counterfeit and pirated goods, according to the U.S. Department of Homeland Security’s report, Combating Trafficking in Counterfeit and Pirated Goods: Report to the President of the United States.
How your products are vulnerable
- Unauthorized or rogue sellers sell a brand’s product without authorization, but that’s just the tip of the iceberg. These sellers do not follow brand guidelines or quality controls (i.e., proper temperature and moisture levels for storage) and sell expired, spoiled, or damaged products as new. Manufacturing issues go unreported, thus cannot be fixed. This is especially a problem for consumables and kids’ toys, which have mandatory requirements for reporting.
- In addition to stealing and degrading a good brand name, counterfeiters make and sell sub-par fakes of products. They don’t adhere to legally required product safety and quality standards and as a result, their actions can destroy a brand’s value. With the growing number of rouge sellers and phony products wreaking havoc on the Amazon marketplace, navigating and protecting your brand requires a proactive approach.
Fortunately, there are key steps you can take to identify and eliminate counterfeit sellers on Amazon:
How rogue sellers and counterfeiters game the Amazon system
- They build onto top-selling listings as a different product variation, which can violate Amazon’s policy and take sales away from the original, authorized listing.
- They commit copyright piracy by using your official images to sell fake products. Because forgers are getting better at manipulating the pictures, computer algorithms have a harder time finding the copyright-infringing listings.
- In some cases, a brand’s Chinese manufacturers might knock off a product. The top two economies for IPR infringing seized goods in FY2017 were The People’s Republic of China and Hong Kong, an estimated total MSRP $940.8 million. They often have a low barrier to entry and little consequence for making a product’s design into their own version to sell on Amazon and other marketplaces. The difficulty of enforcing NDAs and Non-Competes with Chinese entities doesn’t help.
Strategies for identifying rogue sellers and counterfeiters
- Finding out where unauthorized sellers get their inventory of your products. Serializing products and placing a test buy from unknown sellers can help identify holes in your distribution system. Amazon’s Transparencyy program allows for the serialization of all products sold, for a fee. If products are enrolled in Transparency and lack a Transparency code, Amazon’s warehouses will destroy the product as counterfeit.
- Contact the unauthorized seller via Amazon Messages that formally ask them to tell you where they are sourcing your product. Requesting invoices or a response to the question may reveal gaps in your distribution program. Keep in mind that you cannot force third party sellers to reveal their source of your goods unless you have reason to think they are selling.
Another option is to partner with a third party firm to access its database of third-party sellers and their automated tools to help find and identify unauthorized resellers. - Closely monitor your listings and frequently scan competitors’ products to ensure that infringement is not occurring.
Eliminate unauthorized sellers and counterfeiters
Once you have discovered who is acquiring and selling your products on Amazon without authorization, you can take steps to stop them.
- Create a warranty that only applies to authorized sellers and ensure the warranty language includes a value that is generated for the customer solely by working with the authorized reseller.
- Contact rogue sellers and insist they sell your product as used, not as new. Amazon and Walmart policy require this if the product doesn’t come with the manufacturer’s warranty.
- File a listing violation complaint against rogue sellers that fail to change the product listing. Using Amazon’s intellectual Property Rights reporting tool, you can get rogue sellers banned from selling your product on the platform.
- Specifically for counterfeiters, we recommend test buys and side-by-side pictures of the counterfeit and real items to demonstrate the issue to marketplace enforcement. Remember, a counterfeiter is someone who is violating your IPR (copyrights, trademarks, or patents) to sell a product other than the one you created.
- Brands who face substantial challenges with counterfeiters can apply to Brand Gating and Project Zero, two Amazon programs that greatly increase brands’ anti-counterfeit powers, however, both programs are invite-only and require Brand Registry.
Following the above guidelines will help you restore your brand control on Amazon and protect both your brand and your customers from low quality and potentially dangerous counterfeit products. The DHS report offers a list of best practices for e-commerce platforms and third-party marketplaces as well. As frictionless customer experience becomes increasingly important for sustaining growth, counterfeits are a threat that you cannot ignore.
etailz Inc. helps brands increase their sales on the Amazon, Walmart and eBay marketplaces using proprietary software, agency services and retail partnerships.
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