The Problem of Chinese Counterfeits on Amazon

[vinylawesome]

Interesting article on CNBC about the relationship between Chinese Counterfeits and Amazon.

http://www.cnbc.com/2016/07/08/amazons-chinese-counterfeit-problem-is-getting-worse.html
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The gist of the article.

• Chinese companies are launching knock off products on Amazon of already established brands.
• They buy fake reviews and/or "Review for exchange of free or discounted product" and get into the top ranks of Amazon very quickly.
• The relationship between Amazon Product Seller and Amazon has become strained in many cases.

For Amazon; It is akin to whack a mole to try and remove these knock offs.

Often times the Chinese Company selling the knock off will ;

1. Make a small variation of the patented product to get around the patent.

2. Launch product with "Paid for reviews"

3. Sell as many products as possible before they are shut down or the real reviews, "the markets response" brings them down in the rankings.

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Some Highlights from the article:


"Whaley started a bedding business on Amazon that reached $700,000 in annual sales within three years. Her patented product called BedBand consists of a set of shock cords, clamps and locks designed to keep fitted bed sheets in place."

"By mid-2015, the business was in a tailspin. Revenue plummeted by half and Whaley was forced to lay off eight employees. Her sheet fastener had been copied by a legion of mostly Chinese knockoffs that undercut BedBand on price and jumped the seller ranks by obtaining scores of reviews that watchdog site Fakespot.com determined were inauthentic and "harmful for real consumers."

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"Whaley still counts on Amazon for 90 percent of her revenue but she's actively trying to drive traffic to her own website and partner with other retailers. She's lost all trust in Amazon."

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"Spend any time surveying Amazon sellers and Whaley's narrative will start sounding like the norm."

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"Always a problem, the counterfeiting issue has exploded this year, sellers say, following Amazon's effort to openly court Chinese manufacturers, weaving them intimately into the company's expansive logistics operation....."

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"Amazon even registered with the Federal Maritime Commission to provide ocean freight, simplifying the process for Chinese companies to ship goods directly to Amazon fulfillment centers, cutting out costs and inefficiencies."

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"Sales from Chinese-based sellers more than doubled in 2015 on Amazon's marketplaces, while the company's total revenue increased 20 percent"

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"Critics say Amazon hasn't put the necessary checks in place to manage the influx of counterfeits."

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"To unsuspecting consumers, fake products can appear legitimate because of the Fulfillment by Amazon program, which lets manufacturers send their goods to Amazon's fulfillment centers and hand over a bigger commission, gaining the stamp of approval that comes with an FBA tag."

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"Furthermore, Amazon's commingled inventory option bundles together products from different sellers, meaning that a counterfeit jacket could be sent to an Amazon facility by one merchant and actually sold by another."

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"Birkenstock has seen dozens of stores at a time hawking its Arizona Sandal for $79.99, a full $20 below the retail price. The names of the online storefronts change all the time, one day including the monikers Silver Peak Wine Cellar and Ryan Hollifield and the next Keila*Knightley and Bking sewneg."

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"If customers can verify that they've bought counterfeit goods, Amazon will push sellers to refund the purchase or they kick the sellers off the site," said Price, who also owns a stake in Alibaba. "Amazon does stick up for the consumer. They put the consumer first, not the merchant."

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"Sellers that want to cheat have any number of tools at their disposal. One issue that's enraged merchants is the proliferation of hijacked listings, where sellers suddenly see random names jump into their product page and start promoting the item for a cheaper price."

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"Today, after spending five years and $60,000 on patents, BedBand is the number two seller in the category, behind a brand called Nyche Designs, whose top-selling product is priced at $8.99. Nyche is based in China and registered a U.S. trademark in February, according toTrademarkia.

Based on the quality of reviews, Whaley has good reason to be upset. Fakespot, an independent site that judges the validity of reviews, gives Nyche an F because it "detected product exchange for reviews." In other words, it paid for positive feedback."

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"Amazon has filed multiple lawsuits in the past year against sites that sell reviews, but Nyche's reviews still include language like this: "I received this item at discount in exchange for an honest and unbiased review."









Source: http://www.cnbc.com/2016/07/08/amazons-chinese-counterfeit-problem-is-getting-worse.html

 

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