Amazon: “Earth’s Most Counterfeit-centric Company”?

Confirmed - Amazon Has An Issue With Counterfeit Goods

Quite a bit of noise has been made over the past 6 months about counterfeit goods invading everyone’s favorite marketplace (Amazon).

I was a bystander until 2 (possibly 3) of our orders over the past 3 months contained counterfeit goods.

Counterfeit Order Number One

My wife, a longtime fan of Clarks shoes, purchased a new pair for work. She calls the brand’s wares ‘forever’ shoes – they build them to last and stand the test of time.

Not this time.

The sole gave out and the internal cushioning flattened within a week. Could it be a manufacturing defect? Possible, but highly unlikely. The product was bought from a 3rd party seller who could be anywhere and could also source the shoes from anywhere. The product looks OK, but gone are the days of counterfeits looking like counterfeits. There are entire communities that discuss, rate, and find the best manufacturers to buy fakes from, with the items often selling for mere dollars.

This is exactly why Birkenstock made a recent exit from Amazon – customers were getting garbage replicas of the brand’s iconic hippy sandals. The company wanted to control the customer experience and ensure that there would not be any further damage to the brand.

Counterfeit Order Number Two

My wife, again, bought a pair of shoes.

This time Skechers.

She always buys the same model/SKU, size, color, etc.

What arrived was a pair of shoes that were, in her estimation, 2 sizes bigger than what she was used to. Her feet were swimming in them.

Instead of returning them via Amazon immediately, she took them to the Skechers store in Union Square to compare fit, look, etc.

The results were…shocking. The pair she tried in the store – same SKU, size, color – not only fit as they normally did, but the stitching and sole did not match the Amazon version. Different packaging too.

(Possible) Counterfeit Order Number Three

This time, the order was mine and it was for a beauty product (I’m like that).

It arrived….empty.

The packaging looked solid as did the product (skin lotion). Because everything on the exterior was so on point, I’m going to give a partial nod to a manufacturing issue but note that it could well be counterfeit as well.

Recent History of Amazon and Fraud

In a twist on the sellers of counterfeit goods, there are also fraudulent sellers – people opening seller accounts and closing them without shipping goods (but receiving payment). Scam Sellers reported in August of 2016 that they were seeing in upwards of “...50-100 new fraudulent sellers every day.” Their main site tracks reports of fraudulent sellers.

In January 2017 they detected 1,179 new scam sellers.

The Impacts

The top of mind impacts of Amazon’s counterfeit selling are:

  • Consumer (obviously)
    • This is going to be a huge waste of time for customers, creating a major annoyance and will erode the trust they have in Amazon.
  • Environment
    • Shipping boxes and dunnage will be reused, tape and transport are another story. Shuttling counterfeit goods to a customer only to have them returned will impact transportation fees incrementally. Don’t think the tape cost is trivial – Amazon’s razor-thin margins require every item, movement and unit of manpower to be optimized.
  • Amazon
    • With over 1,000 fraudulent sellers identified last month alone, Amazon’s credibility will no doubt take a hit when 10s of thousands of customers get either empty boxes or counterfeit goods.
    • How much of an infrastructure strain this has on their system remains to be seen. Although minimal, for a company that prides itself on – and requires – efficiencies of the highest level, the wasted efforts from picking, packing, shipping, customer service inquiries and return handling won’t be overlooked.

What Will Happen?

In our house we’re moving to purchasing directly from brand websites when possible. Will all consumers only buy direct? Doubtful. Amazon’s service and pricing is way to good. In the near term there will likely not be a mass exodus from Amazon and the company will only experience immaterial lost revenue.

The likelihood that Amazon will do anything about the counterfeiting issue is up for debate. Amazon’s Referral, Closing and Fulfillment fees net them a handsome sum and buoys their business. It would be hard for them to rationalize shutting down even a small part of such a valuable revenue stream. The consumer allure of Prime has some sellers in a race to the bottom, willing to pay exorbitant fees to sell on the marketplace.

Amazon’s protection of sellers makes it impossible for companies to litigate. The frustrated customer will take advantage of Amazon’s generous return policy, get their money back and make their purchase on the brand’s site. Said customer will likely return to Amazon again and again to buy whatever else they need.

Amazon wins…again.

Also published on Medium.