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November, 2017

Chinese counterfeiters thrive on Amazon

Original article: Forbes

Chinese sellers of fake goods have long made domestic e-commerce sites home. Despite Alibaba's best public-relations efforts, the name "Taobao" still is synonymous with cheap knock-off products. In contrast, global e-commerce sites like Amazon are supposed to be relatively free of counterfeit goods. 


That's starting to change, according to a new report by Forbes. The companies most affected are not big brands, which can usually absorb the losses inflicted on them by IP thieves, but startups. The founders of Blooming Bath, a specialized pillow for bathing infants, fell victim to Chinese counterfeiters soon after their product earned acclaim. Before they knew it, the four Californians saw lookalikes popping up on Amazon. 


Tiffany Pond, a wife of one of Blooming Bath's founders, told Forbes: "These [counterfeits] have popped up by a half dozen different names by thousands of sellers, but all using our photos, designs, and trademarks to market their items."


Chinese counterfeiters "don't honor patents, trademarks, copyrights, or anything..." she added. 


Julie Zerbo of the Fashion Law site told Forbes earlier this year that Chinese sellers excel at identifying top-selling products on Amazon and then getting fake versions of those items onto the platform quickly. Further, "they are very good at hiding their identities and making themselves untraceable in order to avoid legal ramification of their actions.”

Analysis:

Unsurprisingly, the Blooming Bath knock-offs are of inferior quality. The damage to the company's reputation is at least as problematic as the hit its earnings have taken. Forbes notes that buyers of the bogus bath pillows are often unaware that they purchased a fake. When they complain about it on e-commerce sites or social media, Blooming Bath gets the blame. 


TIPG has previously pointed out that Western consumers are more likely to mistakenly purchase a fake product than their Chinese counterparts. It's a matter of experience: Fakes are a major part of the Chinese retail ecosystem, less so in the U.S. and Europe. Still, in Blooming Bath's case, there is a clear discrepancy between the genuine product and the knock-offs. The former comes up first in Amazon's search results; it costs $39.99, has 842 customer reviews, and the sponsored seller account is called "Blooming Bath." 


In contrast, the fakes are sold for as little as 14.99, have few customer reviews, and are attached to non-official seller accounts. Consumers who buy these products anyway are likely to be bargain hunters - probably not the customers Blooming Bath wants. 


To fight counterfeiters, Amazon has a Brand Registry which offers brand owners access to proprietary text and image search, predictive automation based on one's reports of suspected IP violations, and more authority over product listings. 


It also offers brand owners or agents the opportunity to report infringements. The problem with takedown requests, however, is that counterfeiters reappear swiftly under different seller accounts. Unless Amazon bans China-based sellers from its marketplace, fake listings will continue to proliferate. 


A ban is unlikely given the China market's importance to Amazon's earnings. As Forbes points out, in 2015 Amazon began wooing Chinese sellers aggressively by making it easy for them to sell to the U.S., Canada and Europe. Chinese sellers on Amazon doubled nearly overnight, while profits rose 20% in 2015. More than 60% of Chinese e-commerce sellers are now on Amazon, making it their top cross-border online marketplace. 

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