Until very recently, it seemed that everyone but Amazon was willing to admit that Amazon has a problem with counterfeits. Organizations, such as the American Apparel and Footwear Organization, international trade/logistics firms, giant American consumer goods companies and indie brands, alike, and even some in Washington have voiced concerns about Amazon’s alleged unwillingness to cut down on the plethora of fakes that have saturated its marketplace site.
Yet, it was not until last month that Amazon acknowledged in its annual 10-K filing with the U.S. government that counterfeits are a risk to its business.
Amazon’s overdue admission last month that it may be “unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner” – which was the very first time Amazon had ever used the words “counterfeit” and “pirated” in its 10-K – comes amidst mounting criticism of and a growing number of lawsuits filed against the Seattle-based e-commerce platform, centering on the sale of counterfeit goods on its site.
The Jeff Bezos-founded company has long been adamant that it “strictly prohibits the sale of counterfeit products and invests heavily – both [with] funds and company energy – to ensure our policy against the sale of such products is followed,” but Amazon’s claims simply do not match the reality. And there is a risk that consumers are taking notice. While consumers “trust, and love, Amazon for [its] convenience, assortment, pricing, speed, ease of purchase, [and] frictionless experience,” writes David J. Katz, the chief marketing officer at Randa Accessories, a leading multi-national consumer products company, the growing concerns about counterfeits cannot be ignored.
The infiltration of the Amazon site with a plethora of fakes – which largely began in 2014 when Amazon enabled China-based entities to sell directly to Amazon shoppers in the West – could result in largescale consumer distrust of the platform, and recent efforts by Amazon seem to suggest that it will start taking this issue seriously, even if it does benefit, monetarily speaking, from the sales of all goods – real or otherwise – on its marketplace site, more than half of which comes from third-party sellers.
In a new turn of events, Amazon is looking to bolster its existing (although, arguably lax) anti-counterfeiting efforts by enabling brand owners to police and expediently delete listings on its site for products they suspect are fake, “marking a sharp shift in its struggle to fight counterfeiters that cedes some of its responsibility to other companies,” per the WSJ, as part of Amazon’s newly-announced Project Zero anticounterfeiting effort.
Project Zero is certainly an interesting proposition. Aside from introducing new technology, including AI and machine learning capabilities, to help identify and cut down on the sale of counterfeits on its platform before they reach consumers, the $1 trillion machine that is Amazon is largely putting the onus on brands to separate the real from the fakes.
For instance, part of the Project Zero initiative – a subscription service for brands, which, as of now, is operating on an invitation-only basis – will enable sellers to quickly and automatically remove counterfeit listings, without requiring Amazon’s intervention, a stark change from Amazon’s complicated, current system, which often requires brands “to purchase a test item to see if the products in question are really counterfeit,” among other steps, according to Wired.
One element of the Project Zero subscription, the “Serialization Service,” will allow brands – for between $0.01 and $0.05 per unit – to assign a unique, Amazon-specific serial number to every item they make and each time “a product using [Amazon’s] ‘serialization service’ is ordered, [Amazon] can scan and verify the authenticity of the purchase.” Being touted as similar to the individual serial numbers that many luxury brands use for their products, it is unclear as of now how effective the serialization system will be.
While the project, as a whole, “will likely be embraced by brands, who will now have a quicker way to fight back against sellers who imitate their products,” writes Wired’s Louise Matsakis, it is impossible not to see how it will also “greatly benefit Amazon” by enabling the giant to pawn off some of its responsibilities as the platform owner and operator to individual rights holders.
To an extent, this makes sense. Collaboration between platform operators and rights holders is imperative in the fight against fakes. Moreover, it is the trademark holder’s primary responsibility to police the market for infringing uses of its trademark, legally speaking.
At the very same time, it is difficult not to see the effects of a potential imbalance of power at play here. Amazon is, after all, a $1 trillion empire and highly-advanced tech-based platform, one that almost certainly could make a much bigger dent – by way of technology – in the sale of fakes on its site in a quicker and likely more cost-efficient manner than any individual brand ever could.