Just how actively is Amazon working to fight the sale of counterfeit goods on its site? Not actively enough, according to Swatch Chief Executive Nick Hayek, who told the Wall Street Journal that the e-commerce giant’s failure to commit to “proactively polic[ing] its site for counterfeits and unauthorized retailers,” has prevented the companies from partnering (at least for the time being), despite months of negotiations.
The deal falling through is just the latest in a string of brands and groups publically distancing themselves from Seattle-based Amazon. LVMH – the Paris-based conglomerate that owns Louis Vuitton, Givenchy, Celine, Loewe, Dior, and Marc Jacobs – made headlines almost exactly a year ago when its Chief Financial Officer Jean-Jacques Guiony told investors in a conference, "There is no way we can do business with them for the time being."
Before that, Birkenstock slammed the e-commerce giant, announcing that as of January 1, 2017, it would no longer supply its footwear products to Amazon and will no longer authorize third-party merchants to sell its products on the site, either.
In a memo from Birkenstock last summer, CEO David Kahan, stated: "The Amazon marketplace, which operates as an 'open market,' creates an environment where we experience unacceptable business practices which we believe jeopardize our brand. Policing this activity internally and in partnership with Amazon.com has proven impossible."
The Fight Against Fakes
Central to Birkenstock's move and implicit in LVMH’s bold statement is certainly a jab related to Amazon’s not so subtle problem with counterfeits. While Amazon boasts an incredible reach thanks to its 310 million active customer accounts, such promise is heavily weighed down by the widespread amount of counterfeit goods constantly being peddled on its site, which – to date – have largely gone unaccounted for.
Just this past week, Daimler AG slapped Amazon with a trademark infringement suit, alleging that it is selling counterfeit products with the Mercedes-Benz mark in its Amazon Marketplace, and enabling more widespread infringement thanks to its failure to more aggressively police its site for fakes.
While Amazon says that it is working to improve the quality of its platform to come extent – which, as many analysts have stated, began a swift descent when Amazon decided to allow Chinese sellers to list their products directly on its platform, rather than requiring them to go through domestic importers – there is still a lot of work to be done.
The World Trademark Review’s Trevor Little noted earlier this month, “an Amazon spokeswoman said that [it] does have automated systems in place that constantly scan for and block potential counterfeiters.” But this is not good enough for many brands, including Swatch, which complained that “Amazon’s approach tends to be reactive, so based on rights holder complaints rather than proactive policing.”
Such counterfeit-related woes, and the corresponding press attention, has impaired Amazon’s ability to make a name for itself in the luxury sphere. As WSJ’s Matthew Dalton and Laura Stevens wrote recently, “The absence of high-end products has hampered Amazon’s push to be a force in the fashion industry, despite years of working to expand the merchandise it sells officially though its website.”
With this in mind, the site has been forced to rely on its own in-house brands, such as fast fashion line, Find, for instance, which launched in Europe just last month.
* This is the first in a series of posts detailing Amazon’s attempts to break into the fashion and luxury markets, and where the e-commerce giant is succeeding and falling short.