I read this excellent article in Wired by Louise Matsakis on March 1, 2019 and wanted to share it.
“LAST YEAR, MY roommate bought what she thought were real Apple headphones on Amazon. They looked identical to the ones the company sells, but they turned out to be counterfeit. When she plugged them into her iPhone, she couldn’t hear anything.
Her experience wasn’t a fluke: In 2016, Apple sued a company in New York for allegedly selling counterfeit versions of its accessories on Amazon, like charging cables. And in April, a reporter for The Atlantic successfully ordered fake Apple Airpods on the ecommerce site. It’s not just Apple: Amazon counterfeits have been an issue for all kinds of companies, some of which have publicly complained. Now, Amazon wants to make it easier for brands to fight these phony listings—on their own.
On Thursday, the company announced Project Zero, a program designed to reduce the number of fake products for sale on Amazon. The initiative includes a new tool that will allow some sellers to automatically remove counterfeit listings, without Amazon needing to intervene. Previously, brands had to first report counterfeits to Amazon, in order for the company to investigate and take action. For now, Project Zero is invite-only, though brands can sign up for the waitlist to join.
There are over 2.5 million independent merchants with goods for sale on Amazon’s Marketplace. They pay to list their products with the retail giant, and may also purchase additional services like advertising, shipping, and warehousing. Amazon also sells its own products, but in 2017, more than half of the items customers bought were purchased from these third-party sellers. They fiercely compete with one another to rank highly in Amazon’s search results and earn coveted labels like “Amazon’s Choice.” They must also fight resellers and counterfeiters who may undercut their prices or try to hijack their product listings.
When a third-party seller notices fake versions of their products on Amazon, they must
begin journeying through the company’s labyrinth of rules and policies. Brands are often required, for instance, to purchase a test item to see if the products in question are really counterfeit. Amazon’s system can be so complicated that an entire cottage consulting industry has emerged to help third-party sellers navigate it. With Project Zero, Amazon wants to streamline that process, by playing a smaller role in it.
“What brands are doing right now is very labor-intensive and increases Amazon’s liability,” says Chris McCabe, a former Amazon employee who now runs a consultancy for Amazon sellers. “This is a move to pair off the resellers and the brands in their own arena and battle it out, with Amazon much less involved.”
Many third-party sellers aren’t peddling their own goods on Amazon—they hawk wholesale items they buy from other retailers or suppliers. A reseller might first buy products at a brick-and-mortar store, for instance, and then turn around and put them up for sale on Amazon at a markup. These merchants are taking advantage of what’s known as the “first-sale doctrine,” says CJ Rosenbaum, a lawyer who caters to Amazon sellers. It’s the part of copyright law that makes it legal to resell things like CDs and books.
But Project Zero could make it easier for brands to crack down on these resellers, and find out who is supplying their goods. For example, imagine a clothing brand removes a reseller’s listing for its T-shirts. To get back on Amazon, the reseller may need to prove to the clothing brand that its products were bought from a legitimate supplier. “The suppliers are going to be caught in the middle between brands and Amazon sellers in a really interesting way that didn’t exist before,” says McCabe.
Project Zero is part of a wider effort at Amazon to curtail the sale of counterfeit goods on its platform. In 2016, the company sued a number of sellers who allegedly listed fake products. Since then, Amazon has also overhauled its Brand Registry program, which among other things, lets some brands “gate” their products, meaning other sellers can’t join their listings. Some companies, like Apple, have also brokered agreements with Amazon to only allow authorized resellers to sell on its platform.
As part of Project Zero, Amazon will also now allow brands to assign a unique manufacturer number to every item they make. That way, each time Amazon sells one of their products, it can confirm its authenticity by checking that it came with a legitimate code. The “product sterilization” program, as Amazon calls it, is akin to the identification numbers that often come with luxury handbags.
Amazon’s new counterfeit-fighting tools will likely be embraced by brands, who will now have a quicker way to fight back against sellers who imitate their products. Amazon’s customers may also end up purchasing fewer cheap counterfeits. But Project Zero will also greatly benefit Amazon, which can now can free itself of some of the work of policing its platform by outsourcing it to approved brands. It’s not clear yet how an appeals process may work for sellers.
The battle between brands and counterfeiters on Amazon will likely continue, despite the company’s best efforts. The incentive to create fake products on one of the largest marketplaces in the world remains alluring, especially when billions of dollars are at stake.”
The article can be found at Wired.com.