It's a big problem
According to the Global Brand Counterfeiting Report 2018, sales of fakes are growing at a fearsome 15% each year - and expected to reach $1.82 trillion in 2020. With a capital T. E-commerce makes up a quarter of that - and Amazon is the $800 billion giant of e-commerce, taking 50¢ of every online shopping dollar spent in the U.S. Go figure.
You've probably bought a fake without even knowing it
Last year the U.S. Government Accountability Office made a random buy of 47 products from five major e-commerce purveyors, including Amazon. Guess what? Nearly half turned out to be phoney. Apple Ear Pods sold on Amazon are particularly contaminated. And Birkenstock pulled out of Amazon altogether in 2017 because of fakes. Luckily, if you manage to spot you've bought a fake, you'll be covered by Amazon's generous A-to-Z Guarantee that gives full refunds for almost any problem, few questions asked.
The fake situation is less great for Amazon suppliers and it's largely down to 'commingling'
What's that you may ask? A recent two part Financial Times report highlighted a commingling crisis which goes like this: You the supplier send your widget to Amazon which stores it in one of its various warehouses along with other suppliers selling the same widget. A buyer places a widget order, shipped from the 'commingled' inventory from the buyer's nearest warehouse to enable the 48 hour delivery target. That leaves the door wide open for fake-goods suppliers, who can pass off a copycat good as the real deal by simply applying a manufacturer's barcode.
The sorry story of Brush Hero is a prime example
Americans Kevin Williams and Glenn Archer appeared onShark Tank with their cleaning brush attachment and subsequently opted to commingle their product on Amazon.com to get them shipped quicker. Soon the complaints came in. The brushes didn't rotate or shattered and they were inundated with (fake) one-star reviews. Turned out Amazon was holding fake and real Brush Heroes due to commingled stock that looked identical. Since the top slot on a product listing is determined by speed of shipping and price, the real Brush Hero began losing out to the fakeolas. Williams, a former US government trade analyst, knew he was facing his "worst possible scenario".
Enter "Project Zero"
To fight counterfeits Amazon has been testing a programme since February called Project Zero that lets brands remove counterfeit listings from the site without Amazon's help. Only 500 brands are currently participating. Amazon is apparently also using artificial intelligence to search for fakes - badly as far as we can see. The knock-off of Soda's popular Heng Balance Light still sells on Amazon for almost half the true price, and to add insult to injury is labelled "Amazon's Choice". Come off it Jeff.
Fake Amazon reviews complicate the situation
Last month an investigation by the well respected UK consumer education group Which? found Amazon's tech categories to be full of unknown brands like Ktaoism, Gejin, ZagZog and Vogek, all propped up by thousands of product reviews for cameras, smart watches, headphones and fitness trackers that appeared fake. Most were from unverified reviewers and were perfect five stars. Massive red flag.
Amazon doesn't believe it has a fake review problem
It was furious with the Which? findings. "The approach taken by Which? is flawed and its findings — based on research from an organisation that admits it can’t say whether any review is ‘fake’ and does not know how many reviews have been removed from Amazon — are inaccurate." A sensitive subject.
Because Amazon knows reviews are absolutely critical for sales
Most online shoppers (97%) admit reviews influence their buying decisions and 92% of buyers will hesitate to buy something if it has no customer reviews at all. Harvard research found every one-star increase in favourability can lead to a 5% to 9% increase in revenue. Conversely, spamming a product with fake one-star reviews (like Brush Hero) can kill sales.
The Chinese aren't the only ones cloning your company's products - Amazon itself is doing it too
Amazon knows what the world buys - and what they'll pay. It has all the trillions of data points. It's been offering its own store-brand goods since 2007, though it takes pains to make its own lines appear 'independent'. Last month it was revealed Amazon is launching it's ownEar Pods to take on Apple. As Inc.com wrote recently: "Every successful interaction your business has with a customer on its platform is a nail Amazon can later use to secure your coffin lid."
Last month Amazon made a record $3.6 billion in profit for its first quarter of 2019 - more than doubling its $1.6 billion figure for the same period last year. It's the sixth straight quarter that Amazon's profits have topped $1 billion. Read how they do it here.